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tv   C-SPAN Weekend  CSPAN  May 31, 2010 2:00am-6:00am EDT

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>> new pradesh -- british prime minister david cameron hears questions from members of parliament in his first prime minister questions at the head of a coalition government, live from the house of commons, at 10:00 a.m. wednesday hear on c- span. >> coming up next, the environmental impact of the gulf oil spill. and then a hearing on the use of tarp funds for aig. after that, a look at this year's commencement speeches, including bobby knight and clarence thomas. .
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a look now at the environmental impact of the gulf spill. this is about 40 minutes. >> joining us from new orleans is the campaign director from the gulf restoration network, and we appreciate you joining us this morning. ion to the news from late yesterday when you heard that the top kill procedure had failed to stop the gusher in the gulf. what was your reaction? guest: well, we are absolutely disappointed. it felt like somebody punched us in the gut. there was a lot of hope that this was going to work. not that anyone really bought
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the 60 to 70% chance of success that bp had touted but everyone wanted this to work. and so as we stretch into well beyond that first month, everyone is hoping for something to stem the tide. but we understand that we're in for the long haul here and it really is disappointing. host: what is your organization tasked with doing in response to this spill? guest: well, we're a 15-year-old environmental advocacy orgization. so we've been for our entire history focused on helping to protect and restore the natural resources of the gulf mexico. so for us this is a game changer and it's something that we've put as much of our resources into as possible monitoring t spill, monitoring impacts, having a critical eye on the containment andleanup efforts, watching what's happening as the oil's coming ashore and working for a better response for both the federal government and from bp.
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so we've been doing iependent flyovers of the spill site and oil and its impacts. we're the first group that flew over what was happening offshore in the gulf of mexico that first sunday and have been on the water and in the air trying to keep a hand on what's happening and spreading that and sharing that information, because we found that to be something that hadt been happening as much a we would like. there needs to be better information and we're working to facilitate that host: we're day 41. are things worse or better than you expected in this disaster? guest: i think we have -- it's hard to say. we've never seen anything of this scale before as we watched it unforlede and just really weren't sure what the impacts were going to be. clearly, we're seeing them. you know, hundreds and hundreds of animals have washed up dead, you know, and we ow that the oil is coming ashore. we have seen really likely
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hundreds if not thousands of acres of wetlands' impacted, hundreds of miles of louisiana coastline have seen oil come ago shore. so we know the impacts are there. but there's so much you can't see. under the surface of the gulf of mexico where so much of this oil and so much disburset has been put into that eco system we don't have a good handle on what that's doing. scientistses now are beginning to understand that the oil has created plumes under the surface. we know that is impacting the marine environment somehow. we're just not really sure how. so it' a really important time of year in the gulf of mexico. blue fin tuna, which are really a globe trotting species but the western atlantic population only spauns in the gulf of mexico. they're spawning right now. we know their la va are coming into contact with the oil and dispersents. we don't know what that's doing. it will likely have a f an
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impact on the ability to recover. it's a threatened species. host: go ahead. guest: what we do know is there's a sperm whale population that's in this area that their most productive feeding area is in this canyon. so we know they have been moved off their best feeding area or coming into contact with the oil. so again, we don't know what the impacts are. we expect them to be significant. we hope they're not devastating. host: we are lining up calls. the numbers are on the bottom of your screen. the impact on the envonment. the impact of the livelihood of those living on the gulf coast. caller: thanks for taking my call. i have a comment i guess. i keep hearing a lot of like basically excus making for
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this administrrtion's response to this. and they could talk about the culture that exists with the friendly ties to the oil companies. but the bottom line is according to my underanding is this administration gave this leaking oil well operation a permit to drill. this administration gave this leaking oil well operation an environmental waiver. and how long is this guy's learning curve? he promised to have change. you can only finger point so much. and en, as far as the response to the oil spill, that's where they also went wrong, because it was my understanding that the people in the gulf states, particularly louisiana had their own state disaster plan responses and they were told to stop and do environmental impact statements bere they went ahead with any plan they had while they were facing an
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environmental catastrophe, which is kind of like swatting at a fly while your house is on fire. host: your thoughts on the administration and the state response to the oil spill. impltsdz well, tho one can look at what's happening right now in the gulf of mexico and be satisfied. you can't be satisfied with bp's response, with the administration's response and with the state's response, either. this is a crisis that we're going through right now, and i think clearly there's lots of blame to be assessed everywhere. ultimately this is bp's failure, bp's responsibility. and bp needs to be spending all the money to make the community and environment whole again. but this is going to be a decades long process. so to say the obama administration's fault because his mms had the fin signature, you know, ignores the fact that the drilling plan was created d fir proposed under the bush administration mms and really the changes to
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mms, there are cultural changes that need to be made and we thk that this is, if anhing comes out of this, one thing that we'll hope is administrative kind of perspective is that mms gets completely reconfigured so the internal conflicts of interest are minimized and we can have an aggressive watch dog out there in the gulf of mexico and anywhere that drilling is happening. host: ten days ago your organization, the gulf restoration network, is one of a number of organizations writing a letter to the administration calling for more direct oversite in response to the disaster in the gf of mexico. have you seen any progress on that front? guest: i don't know that i can say that we've seen enough progress, certainly. we've asked for more federalid response here. we've been here for 15 years. we were here five years ago in the wake of hurricane katrina
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and rita. and what we saw is a military response is sometimes wholely appropriate and the best way to bring e full weight and resources of the federal government tbear. what we've seen right now through the coast guard leadership many, many agencies it has not bee adequate. folks in new orleans are hoping for a general hon ray who came down and kd o cigar chomping, butt kicking kind of guy who got a lot of stuff down and marshall resources and was very sensitive to the community well. we haven't seen that type of response and we're hungry for it. host: a caller asked, talking about the oil spill earlier and that caller wondered what could happen now that hurrine season is under way. what's the prediction of what could happen if this gusher is still going and a hurricane hits? guest: well, tuesday is the start of hurricane season, so it is another worry, another level of anxiety placed over
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is horrific scenario that bp's oil drilling disaster has ought to the gulf of mexico. so clearly, if you are moving a lot of water in the gulf of mexico and the wat comes ashore we could see some impacts but i think what we expect is that the later summer tends to be the more active area for this region and storms. so we're hopeful that we'll see far more effective cleanup and containment efforts before we goat the more active part of the season. host: we have our lines open. louisiana next up. good morning. go ahead. caller: well, a couple comments. one is that so many people always complain at least particularly in the very republican area that i live in that they don't wt big government. and yet now they're all complaining that we don't have
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enough government down here to clean up a mess for us. whether it was a natural disaster or a man-made disaster. secondly, one thing i hadn't heard anybody ask the question about is this second drill that they're doing, the rief drill, if the first drill releed incredible pressures, what's to say that the second drill can't create an even worse mess? host: any comment? guest: well, i cerin am not a drilling expert. you know, put some things together in this last month, unfortunately, but we know that the relief well is about a couple months away. the date i read this morning was august. so that is somethi that is too far away. but i hope that they do it as safely and quickly as possible because experts say this is the most guaranteed of the options to shut down this spewing geiser of oil.
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so i don't know clearly they've made mistakes. what we're seeing right now is that deep water drilling is a high wire act without a net. we hope there's something done and some safely and ultimately contains it. host: joe in orlando, florida. go ahead. caller: gd morning. well, the one lady asked about the hurricane. that was one of mine. but i've got a couple quick questions and then i'll hang up and listen. what i gotere is this oil is getting into the gulf stream. isn't that glowing to contaminate the entire world? the gulf stream will carry that oil for years through the entire gulf stream and contaminate the whole world what's already out there. and also, is it possible that it could rain oil on to like we're in florida here. could the storms in the gulf of mexico end up raing oil on to
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florida? and i'm wondering why they can't just drop a gigantic bolder or square piece of concrete on top of it. and i'll hang up and listen. guest: well, i'm not sure about how the oil will interact with storms to create rain. i do know that the gf stream issue is something that a lot of people are concerned about. once it gets into the gulf stream clearly -- it's starting to now and it will be moved through those curnlts and it will show up in placeyou won't expect it. we can see it in the carmes. but as we're watching it come up shore here in gaufen island, alabama, or ship island, mississippi, it's coming up in smaller tar balls. so it's not the images you he seen in louisiana's coastal
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marsh where you'll see a blanket of oil in certain areas. it's sller and more you will see some impact, but you will not see a devastating ecosystem-killing slick of oil that it since the gulf stream. >> at this point, the state of louisiana bearing the brunt of it. >> right now louisiana is once again taking the environmental plight of this nation's addiction to oil. the reality is it is not healthy coastal marshes. they have been devastated through oil and gas exploration in our march, and that is now 4- moving, and what we hope is the nation now sees -- forward- moving, and what we hope as the nation now sees this and we get the nation fully committed to in
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the long haul using bp and the federal government's leadership to make this whole, because it has been affected for decades. >> i want to assure you this. fishermen hired by it bp to mop up sickness as lawmakers pressed for medical care. what can you tell us about efforts to protect people who go in to clean up areas? >> we think it is inadequate. we have talked to some friends of mine, i've been on the phone of them -- with them over this issue. help protect the coastal system. they became part of the vessels of opportunity program. and then put out there with inadequate protection. didn't have ressprators and they're out there in this toxic stew thats louisiana crude mixed with the dispersnt. they've never done hests on this concoction.
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and so now i think it's 11 workers who have been hospitalized, folks who were working to protect their marsh and protect their way of life and this is what bp does? it's outrageous. osha needs to be engaged. what we've also seen is really offensive first responses from bp and the federal agencies. they not only think it might b heat stroke or food poisoning. these are shrimpers. they work out there constantly. if they weren't cleaning up the mess they would be out in their boats. so what we do need to know is what is bp going to do to protect people. we need to put all shrimpers to work. the direction of the federal navy is how we're going to have the boats on the water to contain the spill but those workers have to be protect ds. host: charleston, tennessee. caller: good morning. i don't think this is rocket science. i just think it's boiling down
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to incompetence. the technology exists to close this we will off well off it's used every day. farmers use it to pressure test plumbing at home. auto manufacturers use it to expand. it's just steel with compacted rubber between it and the top and bottom are threaded and when the center shaft is turned it compresses and expands. i don't understand why something like that wouldn't work to plug this. i don't know if they're just -- i don't know. i don't know what the excuse is for not having this closed. it seems simple to me. i know this is a mile deep in the ocean, but why could something like that not work? i'm just -- host: robert one of many weighing in with suggestions.
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here's one from vivian. you mentioned that yr organization has been there for 15 years. do you think that there was adequate preparation before drilling in mile deep water that the procedures were well known in advance on what to do if catastrophe like this haened? guest: well, clearly you can't look at what's happened right now and say yes to that question. there was no preparation, whether it's because mms didn't require an effective blowout response plan or because the industry didn't feel they needed to go through the effort set one up. there just wasn't nearly enough resources mar shled here to quickly and effectively contain and clean up this disaster. and what we saw, that first weekend when we flew over this huge site of the slick, we saw
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three boats out there. and we've been hearing reports that bp had mobilized dozens of boats. there re three boats, two of which were operating the sub, and one was a skimmer that couldn't work because it was in three-foot seas. which three feet in the gulf of mexico is a pretty calm day. so what we found quickly is the technology wasn't the immobilizer didn't exist to deal with this. and as we watch this go on it's clear they haven't changed the cleanup technology, the containment technology from what they used 20 years ago in alaska. and no one said that was terribly effective 20 years ago. so they've expanded and gone to deep water and now ultra deep water drilling for oifplt they've pushed the envelope when it comes to the technology to get at these very deep, very inaccessible oil fields but they've done nothing commensurate to bring along the technology to contain it. this is a high wiract without
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a net and now we're paying the price. host: good morning on our democrat's line. caller: hello. thank you for taking my call. i believe i've heard that up in canada they require two blowout protectors and thenly way they've ever stopped a spill like this has been a relief well. so, and they require that you drill one of those along with the original well. i think that would be a good idea for congress and the senate to write up a bill for that. and i just, i was so glad to hear everybody coming togher on this in the first segment we had. and i wish that it wouldn't continue and i don know why we listen to people like rush limbaugh and palin and beck who make millions of dollars dividing this country and that's what i have to say. and thank you for your service there, sir. anwe appreciate it. host: guest: thank you. host: is your organization one
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that is sort of organizing and massing volunteers to go out there and help mop u clean up or protect some of these delicate marshes et cetera? guest: we have on our website that we put together for this is bp drilling disaster.org. there is a button you can volunteer. but unfortunately, the way this horrific scenario is unfolding is there is not a lot of things for volunteers to do. what we do know is contractors that are paid for by bp are the folks who are the front lines cleaning up this oil. and that the way it has to be. people need to be trained, have proper hazardous material training. and they also clearly need to have the proper protection to be out in this toxic stew. i don't think bp is doing that effectively right now but that's their charge. and when it comes to cleaning up this contamination, 700
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animals that have been kild by this oil far and we have seen really hundreds of birds that have been easketted. everyone sees these iconic images of the brown pell kn turned black and they want to help. and what you can do to help is to take action, to hold bp accountable. to put resources into the ground that's necessary so we learn from this and we effectively respond to this. we unfortunately don't have an outlet for people to come down and help clean the marsh. as i said before, our marshes in louisiana are incredibly vulnerable. they are not a robust system even though they are still a very productive system for the nation. about 30% of the nation's wild caught seafood directly related to these marshes. once the oil gets in, we can't have beam in boots wading around cleaning up the marsh. you're going to do more harm than good. so unfortunately touf do it from afar. but there's you can do from
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your community. so as a nation we learn from this. go to bp drilling disaster.org to take action and to help out. host: there's a piece in the "new york times" about the use of these dispersents to break up the oil. a woman writes this piece, swimming through the spill her, the results of her dive into some of the oil spill. she writes that though all dispersents are potentially dangerous, when ooptplid in such volumes,or ex is a particularly tomism one. she finishes with this.
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the deep water horizon spill has done enough damage without adding to it. would you agree with her? guest: absolutely. iould add into that this on the workers is significant. it seems like it's very negative. we've called when president obama came this week to address this issue we were out there asking for him to put a halt to this unless an until we can tell they're not having more harm than good. we think really as that marine biologist points out, it's really a pr move. it takes the oil from where you can see seen it and puts it out of sight. of course, it's not out of the eco system. it's not hadgic. it doesn't me the oil disappear. it moves it into these deep water plumes just below the surface expanses impacting our marine environment. and we are just terrified that we might be making this matter
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worse than if they were just letting the oil come to the surface where they could be more aggressive and containing and skimming and collecting it. host: our guest joining us from new orleans this morning, aaron vials with the gulf restore ration network, talking about the impact of the gulf oil spill. sandra on our indents line. . . thank you. >> let's go to baltimore, maryland. a republican call. hi, there.
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>> how are you? caller: they wanted to fight bp $100 million per day. i am on board with tha i am on board with that. how are you? >> the sound like a strong response. we want an aggressive federal response. the full weight of the u.s. mitary, as well. seizing their assets or the fine sounds good. we need to bring all our resources necessary here. last i checked, had a lot of them, billions of dollars of profits quarterly. it is time to bring everything to bear in terms of cleaning up the oil and repairing the coastal communities. that is a good step in the right direction. host you've mentioned the under
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water plumes ooil that have been escaping. scientists are building a case for undersea plumes. has this not been noticed before? guest: to is not something we have been aware of here in the gulf of mexico. there are a number of reason we have not seemed a disaster like this before. we have not seen unchecked geysers spewing forth. there is a natural sponse that could likely to explain the plumes. there is an outrageous amount of disbursement that has been used here. there is an unprecedented deep water injection at theell head site can explain some of desperat some of this -- some o. as the plumes eventually get
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eaten up by the natural bacteria out there,e will likely see oxygen depletion which causes a condition called hypoxia. as the mississippi river puts out amazing amounts of nutrients into the gulf of mexico, that excess nutrients blooms algae and that does and it creates ypoxia which sustains marine life. week are afraid we will see multiplplans in the gulf of mexico for it to remain a productive ecosystem. host: we have a sweet here from, who writes, "everybody is an oil spill expert. drop a boulder on it. this is not a warner brothers cartoon." new orleans is next.
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caller: thank you for ting my call. in canada, they require a second drill being done at the same time as well as devices to kill the well when these accidents happen. is that true that they have that in canada? guest: we have heard that. we are checking on it now. we hopefully will be able to make sure that is in fact the case. we have a canian member of parliament who is interested in coming down. we will ask him when he comes down to discuss the issue. that is certainlyomething how the nation approaches it deepwater drilling is how we inform our approach in the gulf of mexico. it sets the bar when it comes to the technology to explore for oil. clearly, we have not when it comes to the ability to clean up
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and stop accidents. host: there is an article on u.s. policy in the arctic. our democrats line is next. you aren the air. caller: i have the solution to stopping the oil leak. you take weather balloons of catheters and forced them into the hole and blow them up. you will need three or four in case one of them explodes. host: there are a lot of experts on the line this morning. the impact on the lifestyle of the livelihood of the fishermen, the watermen on the gulf coast, here is a "new york times" col. article.
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any sense of how bad it will be? guest: the fisheries in louisiana is about $2.6 billion annually. we will see that severely curtailed. you can multiply the impact of those communities. i have been talking to my trumping friends and oyster man. -- my shrimping friends and oystermen. these communities are still not recovered from katrina and ike. they are recovering but this is the inverse of katrina. boats will be there. the docks will be there. they might not be able to get to them.
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this is an ecosystem that is open for business. if you are at a restaurant, please keep more seafood. we have been aggressive to make sure it is safe. we are closing areas where oil might be coming ashore. if it is on the menu, it is safe and he did. these communities need help. we look forward. we know the oil is contaminating the wetlands right now. that willontinue because the oil has not stopped flowing yet. we think it will have significant long-term effects. that is the worst-case scenario. we hope that whatever the bp response is, we want to make sure the ecosystem is cleaned up and make sure these coastal communities remain whole and are supported in the interim as they are being affected by the oil spill.
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we must lear from this and make sure that any offshore drilling is done safely with the effect of responses. ultimately, we hope to get off oil and we don't put our coastal areas in harm's way. host: the head of bp america has testified on numerous hearings since the initial oil rig exploded. he testified last week on several hearings where you can find online at c-span.org. he is focusing on what bp will do in terms of environmental restoration and the gulf. listen to this. >> to ensure the rapid implementation of sticking to supplant, we have made available $25,000 each in block grants. on monday, we would said -- we have said we would make up to $100 million available to research program to study the impact of the deepwater verizon
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impact andts associated response along the gulf of mexico. beyond the environmental impact, there are also economic impacts. bp will pay all necessary, and costs and is committed ted to paying all legitimate claims for a loss of damages caused by the spill. we are expediting interim payments to individuals and small-business owners. whose livelihood has been directly impacted. host: anything from that testimony you like to react to guest: it sounds appropriate but there is an awful lot of legal which will room in there. we understand that right now, the nation's eyes are focused on bp and the gulf coast. they are saying the right things. if you think back 20 years ago to the exxon valdez, it is a similar game plan. the corporation will be contrite
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and apologetic and commit to amazing things. the question will be, after this geyser is capped and the worst oil impacts is contained, what will they be saying. where will they draw line for a pro. damages? we will need to hold their feet to the fire. they will say the right stuff right now. what will they say in five years to the local community that has legacy issues that relate to the ool drilling disaster. ? we don't know right now but we have the ability to watch them every step of the way. host: texas, an independent caller, go ahead. caller: i don't kn if this is true but maybe you can shed some light on this.
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as russia accused nuclear devices to cap off similar oil geysers? i think host: that is the second call we have haon that. guest: i have heard it but i have not checked it out. we han't done any trust or the research. -- trust for the research. host: long beach island, new jersey, republican line. go ahead. caller: with the way nasa handles missile with the thrust and wait and everything else and some of the scientists at nasa, maybe they cou design a pipe that could go over the end of that or design something else. they seem to handle very good for the space ships and everything. they have some of the best scientists and the world.
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host: we read a piece earlier that suggested americans were relying too much on technology to solve their problems. guest: if we rely too much on technology, clearly that is coming due now. technology is failing us. the top hat did not work. the copper down did not work. all the technology we mustard to shut this thing down at the source or contain it has failed. they are operating 1 mile deep. the best minds in the o industry are in the room in houston working for the different scenarios. it is outrageous that these scenarios were not worked through before. this is all being done on the fly and as much as 1 million gallons per day of oil is flowing into the gulf of mexico. we need to think very long and
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rd about how our energy technology and energy economy is set up for the future. as the easy oil has been captured, we get into the harter oil. --harder oil. every time we discuss this, we hear about coastal's drilling in the interim until we can get into solar and wind. that doesn't make any sense to me. the folks i have talked to says it takes 10 or 15 years to get a new offshore field online. where will we be in 10 or 15 years? we want to get the transportation system off of oil. i bet in 10 or 15 years, we will be pretty far along. this is openly bp' responsibilitys it is not openly their fault. we have a very energy-intensive
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lifestyle. we have not demanded better from our leaders and energy companies. i hope now th we do. host: federal regulators have been blamed. here is a piece suggesting we share blame. your thoughts on that? guest: i heard that rush limbaugh blamed the sierra club. he was blaming them from blowing up the oil rig. there are many people who are to blame and the environmentalists are clearly getting some from the right. it is an interesting argument
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but i do not understand it. the gulf of mexico has shouldered the responsibility of providing domestic energy for a long tim if anyone wants to bring it to your shores, see how it goes because of energy production. because other coastal communities do not want it does not mean those coastal communitieare to blame. we are to blame as a nation for not making the tough decisions and not demanding better leadership from our federal leaders to get us off of oil and not just put it into the convenience sacrifi zone in the gulf of mexico. host: ohio, good morning on our democrat line. caller: thank you for bringing up that we have to look at our personal consumption habits. people don't want to look at that. it is obvious that bp did not to the preliminary safeguards that
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they needed to because of money. all that being obvious, the bp executives sounds like they will take on responsibility. the wall street executives did not sound the same way. you had admiral allen on the other day and he said the oil rigs in saudi arabia could not be used in the gulf because of the shallow nest. ness. another expert said the tankers uld be used. why wouldn't use them if they could? could cspan do shows on what is going on in iraq and afghanistan? our major media has talked only about oil. host: we will speak on monday's program for nearly one full hour on that subject.
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guest: the technology to contain this is not being utilized. it is either because it does not exist or there isome other reason, i cannot answer that. what i do know is that we have monitored the best and what would ppen at the site and were the oil is coming up and in the marshes where the oil is coming ashore. it is having a response but it calls for a more federalized response. we also called for a halt to the toc disbursement activity. the shrimpers were working to protect their marshes and were getting sick. most importantly, this is a very vulnerable and important ecosystem that is getting hammered because of our nation's dependence on oil. we need to make tt ecosystem hall and bp money can be used to
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move in that direction. we need to commit long-term to this region. you can go to bp oil drilling disaster.org to see whate are doin after that, commencement speeches including remarks by bobby knight and clarence thomas. then if is q&a with david and jeanne heidler. tomorrow on "washington journal," general stephen lanza.
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earle morris discusses his efforts to bring everyone war ii veteran to washington, d.c., and bruce fleming talks about his recent op-ed piece, the academy's march towards mediocrities. liven 7:00 a.m. eastern here on c-span. -- live at 7:00 a.m. eastern here on c-span. >> c-span is available on television, radio, aad online, and you can also connect on twitter, facebook, and youtube. >> now hearing on the financial assistance provided to aig under the troubled assets relief program and other government programs. in this portion of the hearing you will hear from aig's president and ceo. this is an hour and 40 minutes.
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robert is the president and chief exhibit officer of aig. he joined aig asthe ceo in august of mr. benmosche, when you are ready, welcome. five minutes for an opening statement. thank you. >> first of all, i appreciate the opportunity t be here with all of you. and describe aig's progress in stabilizing the company. okay. preserving and growing the value of our businesses, reducing our risks and repaying the taxpayers. i joined, as you said, in august of a line with the prior goal of stabilizing the company and boosting employee morale as a high priority. throughout my years in the insurance industry i restricted aig as a company and as a competitor. and i just nine months of the company i can see substantial progress in redefining our strategy in restoring
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credibility and confidence in aig. of course were it not for the commitment of the u.s. government at a time of great uncertainty, aig wouldn't be on the patht is today. i want to thank the government and the american taxpayer. since receiving support, aig has worked in close coordination with the federal reserve and u.s. treasury. weppreciate the constructive role that they have played. today aig remains a significant contributor to the u.s. economy and a critical provider of financial security to countless communities and individuals across the country. aig has over 40,000 hard-working and dedicated employees across the nation. tens of millions of americans are employees by entities protected by the commercial insurance. aig is also one of the largest holders of municipal bonds, providing a much-needed source of capital for municipalities to build new schools and etter roads. charter's our property gros have gross written premiums of
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more than $40,000,000,000.2009. serving more than 40 million customers around the world. american financial groups are likened the time services business is one of the organization's in the u.s. served morethan 16 million customers in 2009. the company has a fleet of approximately 1,000 aircraft and has purchased more boeing aircraft than any ther airline or leasing company. at aig w take seriously the responsibility that comes with being so heavily integrated with the u.s. economy. and we are well on our way to making aig into a more streamlined focused company with sound well-managed businesses. a transparent and consistent government syst and stable risk profile and capital structure prior to my arrival g focused on repealing the tax payers by moving quickly to the certain parts of the organization. all i was concerned that the
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course of action might not enable aig to repay the eight, the company had received so i immediately set about to change the approach to secure greater value for the taxpayers. the strategy is beginning to pay off. we recently announced the sales of approximately $51 billion. nearly 30 million in cash, and approximately $21 billion i securities. aia and alco are a success of our strategy to maximize the value of our assets. once closed the will and aig can repay the federal reserve bank of new york with cash and sells securities overtime to further repaid the government. our success e now being reflected in the marketplace. the report operating profit of $879 million compared to the 710 million-dollar profit the year before. a 24% increase. some american financial group recorded first quarter operating
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income of $1.1 billion compared to an operating loss of 116 million in the first quarter of 2009. and this kind of market confidence we have raised approximately $4 billion from private markets and i might add parenthetically that is with secured and unsecured both. aig financial products continues to make substantial progress its portfoliorom the height of over $2 trillion. at the end of 2008 the $755 billion as of march 31st, 2010. these accomplishments are enabled by dedicated efforts of tens of thousands of aig employees. at aig it is critical we strike the right balance between paying competitively and injuring the levels are appropriate in light of the government support. we are implementing new programs to create a consistent performance management culture.
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one that aligns our employees day-to-day activities with the interest of our stakeholders and this approach we are retaining talent as well as attracting new talent to help manage our businesses. members of the panel, i am confident that aig is now in the ear path torepay the taxpayers. i thank do for the opportunity to bring you up-to-date andlook forward to your questions. >> thank you very much, mr. benmosche. we appreciate you being here today. do i anticipate aig baala need any more tax money? taxpayers' money i should say? >> right now we don't anticipate that. we are looking at where we are at. we are still dealing with minor cash flow issues but if you look at the success that we had keep in mind we were able to raise me sales of assets dustin kuran secure market as well as renegotiating the bank lines after a lot of work with the
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banks examining the success. that is almost an 8 billion-doll improvement. we are also able to raise in the market the securitized financing $3.5 billion to suport american general finance, so as far as we continue to operate the country strongly, profitably we should we have retained people retaining business of showing sales all of the things you want with strong companies we are beginning to see we get more access to financing. so we would hope not. >> we all hope not. what we are trying to do is hand down more so that when mr. gallant doesn't say he thinks you will be about to make it through the year without havi to call on taxpayer funds, you are seeing you think the combination of sales with major assets renegotiations of some of the outstanding debt and raising more money in debt markets will be enough to meet your cash needs as they go forward? i just want to make sure i am getting the strategy right. >> at this stage of the game we
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have a credit line with federal reserve and so we see that as going up and going down so you will see based upon the actities of cash flow it may come down alittle bit and it may go back up a little bit so we see that as a line of edit we are using and have available until 2013. we also will go through certain activities like we went to the treasury in order to strengthen the insurance company keep in mind that for aig our insurance companies are strong. we want to make them stronger and th is important because our clients look to us for our promise and guarantees. so therefore when the state of pennsylvania says they are concerned about charters to ensure they have stock in and they say they are concerned about that being in the capitol they would like us to remove it, than if it strengthens the insurance company which allows this to be able to compete in the marketplace we did in fact ask for money to be able to do the shift from the casualty companies and aia and aig holdif
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there is some of the financing going on but it's only to make sure that we maintain solid strength in all of our cpanies and i don't see a huge amount of demand to do that between now and the end of the year. >> so you think that youoth have the cash to meet your needs for the ones coming due for payments that are coming to and that the only time they will be joined othe government on this will be in order to strengthen the capitol position to individual insurance subsidiaries is that right? >> that's correct. so for example we are planning once the market settles down these are on stable markets as we can all read and see we would like to repay the fed the $4 billion. we believe that we can take some of the collateral they had told against the 4 billion we can go to the marketplace and raise the additional money to pay down $4 billion to the federal reserve. now, we may decide it's paid
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down and we may need 500 million later on so let me sum that up and down but we see major activities now between now and the end of the year beginning to reduce the amount of money that we owe the federal reserve. >> i know mr. gallant is complementary of the way that you have managed the company since you have taken over but what i would like to hearif you have the strategy mapped out what is the biggest challenge to the strategy? what are the risks? where are the places that you might run into trouble and see problems? >> to me the greatest risk is in the day-to-day operations of the insurance company in particular. we have never had a problem to the entirerisis with the insurance companies. they are well regulated, very well regulated by the states and by the countries we do business with and so they have ma sure all of the things we do are protected for the policyholders so we have to make sure we run the businesses successfully and
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make sure that we have the right capital in the businesses and we have the right risk-based capital ratio is expected in the business is and that we can retain and attract people but we can be able to retain our current customers' and grow new customers. there is a vibrant strong operating unit that is a successful company. that is our highest priority and that is what we are focused on. the second priority is to show that we can accept the support of the u.s. government in a way that we're left with an investment company that people will continue to feel confident and support in. >> what me just focus you though mr. benmosche i understand these articles. my question was the place is that you see the most rest not meeting those gls. >> by talking about not be able to achieve good operational results. >> that is what i need to get thank you, sir. >> mr. mcwatters. >> thank you and thank you for attending the hearing today. it appears that you will not
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need additional t.a.r.p. funds. at least that is what you just said. today what is an aig salting into the? >> absolutely. >> great,reat. duals as it in your opening statement you intended to pay back the tax payers. you didn't say i'm going to pay back everything but the $5 billion or $50 billion. it sounded like the intent is to pay back everything. >> i believe that we will pay back all that we owe to the u.s. government and i believe that the end of the day the u.s. government will make an appropriate profit. >> the ceo says we, meaning that taxpayers, will lose $36 billion the omb since delete clauses 50 billions there's a spread. can you help me close the gap to understand and how you can pay back everything and no one says to the contrary.
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>> i would love to be the to buy back everything we go and investors can take a 50 billion-dollar loss. i would be able to if there would be tomorrow and nobody would because we are a strong vibrt company with lot of money. i can't tell how they do the analysis but i'm confident you'll get your money plus a profit. and specifically what is the exit strategy? when you come up one of you have to write a one-page exit strategy to pay back the taxpayers what would it be? >> the first goal was make sure we pay back the federal reserve's so we are working ard to monetize the assets we have and we continue to look at other strategies and different points of modernization so the keys to pay back the $52 billion. once that is paid back and the fed is covered keep in mind we are doing that as quickly as we can knowing that we of the 2013 we still would like to get it done thiyear or xt year if all possible the sales give a tremendous shot at getting that
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ne and we continue to modernize the commoditized then it begins to talk to the u.s. treasury how to deal with the preachers. >> how about the return to profitability? it is one thing to sell a subsidiary take the cash and pulled on the debt, but how do you return aig systemically to profitable company? >> if you look at the fourth quarter with a reported a huge loss if you look what was the compont of the loss we made a profit and so i believe we are looking at a company that once we sell-off the company's talked-about or whose assets we talked about i don't think we are to get a company that could earn in 2011 without extraordinary charges and criminal charges and all these other things. i believe we have a conflict between ix to $8 billion after taxes. so it is a substantial durham. ..
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winding down financial products, or are you losing money? >> if you look at our numbers, we are holding our own, so it breaks even. keep in mind one of the variables that occurs is that we have a lot of debt, and is one of the anomalies of our accounting system. accounting system. as people become more concerned about aig, it actually improves the profitability of financial products sewer spreads widen an therefore we can take in earnings which is unfortunate. we shouldn't do that, but we do.
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that is how we comports on bad times we live better and didn't good times we look were so i will tell you if you take all that accounting out of the noise you will see risking. the team is done an absolutely outstanding job. we are fortunate they are still there. even though they were vilifi and appropriately they are working as hard as they can to de-risk this book, and do it in a reakeven to dislike off at. >> when th close down a credit default swap and are they currently closing-- are attempting to negotiate this down? >> we negotiate what we can negotiate in a marketplace from the position of strength so i don't have the analysis. somebody would have to give you wh level but i will tell you when we did the market value and what the anticipatedarket values could be and where we think is a good optimal position where we are getting a good price and getting out and dealing with an effect de-risking the company from where we have collateral potential and so on i think they are doing an excellent job of
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getting good prices. they were not getting good prices a year ago. we were getting hammered a year ago in the marketplace. >> do change because of the personnel within the financial part-- products? >> the market realize weere going to change her approach, that we are not going to liquidate this company and therefore the street realize they want to negotiate with us from the position of strength. >> let us know in general terms if you are able to negotiate discounts. that would be helpful. >> i think it is more about trading and selling and doing things that i think i have to go back and have the people give you an exact answer. i don't have that. >> okay, fair enough. >> mr. silvers. >> mr. benmosche i am interested in the contradiction in the contrast is between your testimony, mr. gallant's testimony and mr. clark's. can you a explained to make your understanding of the difference
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between your estimation of the company's earnings power going forward, after your asset sales and mr. gallant's and can you explain to me your general, ho your general characterization of your company's financial position is consistent with smp's view that outs and government support are. >> i can't comment on mr. gallant. i i know what i' running, i know the company i'm running and i have confidence in this company and i know what i'm talking about so you up to see whether he understands the company as well as i do. >> mr. benmosche that is not an acceptable answer. we represent your majority stockholder or at least the kind of do. we are trying to look out for your majority stockholder. i am frankly frightened by what mr. gallant said on behalf of the american public and i would like you to explain specifically with reference to numbers why he
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is ron. >> i have not looked at his report that i would be glad to have the people studied and do a side-by-side. we did that when we had a report that said we had an 11 billion-dollar hold in the reserves that was written by ernst dean and we did not have $11 billion. we went through that report, show them why they were wrong and they still went forward with it. i am happy to do that for him as well. >> explained to me how you get from today's operating results to the type of cash flows you were just describing, the six to 8 billion-dollar range in 2011? >> in the first quarter? we made $879 billion. with casualty losses and chile, if you look at what we did in our son america we have a strong result of almost $1 billion. if we continue to operate all the other companies that a positive and just deal with those two companies alone, you get close to the number. so i would say to you that if you lo at our results fourth
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quarter without extraordinary charges, if you look at where we were in the first quarter. >> mr. benmosche i missing something. your total operating income in the first quarter this year is $800 million. >> multiply that times for. >> i don't know what number you are referring to. >> we made a profit of 1.4 billion in in the first-quarter. >> i'm talking about your upbringing, which i think is more relevant to what we are talking about. >> you have to look at all the pluses and minuses, all the accounting charges. for example we have to take the charge of e fee that is assumed by the government taking 80% ownership of $23 billion. we take charges of between five and $800 mlion a quarter to advertise the 23 billion-dollar fee which represents the price we pay for the line of credit from the federal reserve so in fact we pay $23 billion a point for an 85 billion-dollar. >> if you are double b. credit without support from the
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government aren't you going to have to replace that with comparle expense. >> i don't know how expensive it will be. as we begin to achieve our plans we will be in best by the end of the air. >> you can imagine i think are our concern about just the gap between different assessments here. i would very much welcome and i'm sure the other panel members would welcome a more detailed explanation of how you think you are going to not d.a. double b without government support which seems to me to be critical to the question of whether or not your representation about the likely outcome here for the publiceing paid back in full with a respectable profit are realistic and can be realized. i think you know, we have heard, i think in general, a great deal of support and a number of compliments for the way you manage your company so far.
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but, you know i think we need to see some support for where, for what the light of-- likely outcomes are and why we don't have atructural problem not susceptible to managerial skill. if i might turn and ask u a different question. some have suggested, including professor toske suggesting we had to be selling more quickly. i know that is not in your review. can you explain, and i am sympathetic to your position. i think there is a certain way to realize losses but i would appreciate to hear from you and your own words what you have taken that view and with the benefit has en for the public as an investor in aig? >> i think so far you have seen prices improved. i think at one point they were thinking of selling-- for the high teens and so we have got a
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very aggressive price and other properties that are out there you are finding people willing to come to the table and talk to us about more value. you cannot buy a business that is in trouble number one and number two copyleft to sell when thtime is right. we have to make sure we move as quickly as we can but so ar even for example and financial products we probably would woule been down an additional five earlin every the sales to try to de-risk that business to quickly, so now that we are taking a risk out, you are going to see the fact that we have the money here. sometimes it is not obvious that we made it but we didn't lose it so i can only tell you as we move quickly, we are finding more people coming to the table, more people willing to invest with us. i think you will see more options open up. we just met with boeing as you know. we are large customer bowling and our goal is to continue to buy boeing aircraft. lowing is going to work with with vestibule to get sources
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capital to continually infesting continually strengthen our business over time. that will provide good operating costs. at all levels ware looking at wa to improve our position stngthen our position and find appropriate wires and i think we will do that as quickly as we can. we are not just sitting here saying let's wait for the 2013 but you have to do it when the market is ripe four. >> and i appreciate your offer to provide the numbers an we would like to have those numbe for the record on the analysis, why do you have a different analysis on the profit projections, where those are coming from and on the credit rating. >> i just heard her say at and i'm watching the tv and i'll be they are offering our ready. i am sure tey are running it right now. >> we will hold the record open so we will be able to get those numbers. >> i'm sure they are working on a. >> that sounds good. professor toske. >> i don't want to ask you to comment on a report that you
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didn't write or maybe haven't even read, but the previous witness said his guess was $6. do you have a guess as to what you think the share price for aig should be in your own opinion? >> ful inappropriate to even comment. >> okay, that is fin. you seem to suggest the you can operate, you are borrowing money and insecure credit and operating in the debt market. is that what i heard you say? the previous witness said that you couldn't borrow money and your account is you can? >> i borrowed 1.7 billion unsecured. without a guarantee from aig. >> so, can you give me i guess some more background? exactly when you say you a-- exactly as you are removing the risk from aig, said part of a long-term solution for the
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company? do you view aig is continuing to be a part of aig in the long run? >> i do not irk us be okay so can you describe to me a little how you are going to move from where you are today to a company that looks a little different? >> i think what is important now as we focus on the core bunesses of aig which is the insurance companies. what you have is a lot of public companies created outside that entity which you heard a lot about her co-i think we should minimize all of those, which were basically trading in the aaa of the insurance company and being able to bar when the rket is short and begin to do things when the assets are long so those kinds of trade kds of businesses we need to stop. we should be in a solid business that talks about we provide protection in various forms whether it is property casualty, life annuities and though should be the primary businesses that will run and run them in a way that they are not erleveraged.
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>> essentially that is your vision of what your company is going to look like at the end of the day when you are out of all of this, focus primarily on the core insurance? >> we will be the worlds largest property and casualty insurer with a strong life and annuity business in the united states and other selected businesses that will enhance that nucleus and core. >> oy, thank you. >> mr. benmosche, i have been struck as i have read through the documentation on aig about the incredible number of intecorporate guarantees and loans among the various, particularly among the insurance subsidiaries, and i see that as once the parents got into trouble as everyone likes to point out, aig sp was one tiny part of aig, and a police threatens the entire rest of the
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company in pt because of this incredible interconnection so i would like to know how you are managing that going forward? is this a company th will still be run as one that has lots of cross guarantees and intracompany loans and inter-subsidiary loves? >> the answer is no. i think it was created out of a lot of complexity over a lot of time. we are a company that has over 500 general ledger senate today. the degree of complexity to run the business every day is huge which is why the people are so important to this company and so i will tell you that they are working daily looking at ways to de-lever, to change removes a part of what you will see, we need capital put into the insurance company. you just don't take something out of the insurance company without the approval of the pledges-- whether it is in korea or in tennessee. as well as new york and
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pennsylvania so you have to make sure as we do this we do it in an appropriate way that the leg -- regulators are satisfied that at the end the day we want to scrape businesses we can see what they are, see their financials and therefore we can go to the capital markets for that insurance company and f example deal with raising debt, bonds and so on which is what makes them even stronger from a ratings agency point of view because they have access to the market so we have got to have them understood, clear and plain. it is not easy to do. you can't accelerate some of the sales because it it is too intertned, to complex. >> would it be fair than to say that you are striving for a simpler, and more transparent business then you have had in the past? >>e will achieve, that is a simpler organization. we will do that because you have to do that to have your exit from the government and you have to be able to do that to get the rating agencies to give us very good ratings for insurance companies. >> would you be able to demonstrate some progress along
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that line say from a year ago? >> you don't have to do it off the top of your ad four we can hold the record open. >> the whole rating agency feedback from smp in particular exhibit talks about the progress we are making and i think at the end of the day when we have rating upgrades in our insurance companies. >> you would forgive us if we weren't entirely reliant on rating agencies at this time? >> i won't comment at this time. >> thank you, but it would be helpful, i want to stress this because i think it is very important, if you could give us as a supplement to your testimony, some examples of the work that has already been done to make this a more transparent company and a company, let's describe it as one with a simpler chart of how it works. >> i'm happy to have the team put together things we have done since on america to pull things apart so we don't have to deal with all the cost collateral
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station agreements. >> thank you her co-mr. mcwatters. >> thank you her co-i will follow-up on professor warren's comment and i will put it in this way. it still seems to me that aig is too big to fail, that if for whatever reason you ran out of cash, liquidity crunch again, chances are the taxpayers would have to come to your rescue. let's stipulate that for a second. what has your firm done to negate that status? are you drawing back om the too big to fail situation, where a year from now, two, three years from now we are not going to have to worry about aig being too big to fail. if you fail you can be sold, brokenp or whatever. and afterwards you have a will living will. are you developing a pla >> i think to say we are too big to fail comes from the facwe have a lot of assets. my personal belief that the
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reason you might think we are too big to fail as wowe you a lot of money and therefore we can't fail until we pay you back i think that is the issue. you have got to make sure we do this in a way that clearly pays back the taxpayer 100 cents on the dollar or pre-profit and the extent we do that to remain a company than what congress decides is too big to fail i don't believe aig once we pay back the government and we ask it as an investment-grade company, i believe that we are no longer too big to fail. >> so there will be no financial products? you were out of that business? >> i can only tell you what i will do. i hope that somehow we find the appropriate regulations that say in the future that any company that decides to get in business and put at risk some of the businesses we had in the insurance or banking is
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preventive. i can't tell whether my success -- successor will find a clever way but i will tell you well i'm here i want to make sure that is not part of what this company is because that is not what we should be doing. >> specifically are you adopting risk magement and internal control provisions that will simply prevent, prohibit smp from coming back? >> you cannot create policies that will prevt people from making bad management decisions. at the e of the day the ceo have to take responsibility for the activities in their company. at the end of the day i am very confident we have all of the processes in place in risk management but at the end of the day if i don't lead the company in the right way i can get the compy in trouble and the board of directors will do the best to oversee me. they will make sure they have the checks and balances but at the end of the day if we don't listen to what we hear, we can get in trouble and i believe are boarded aig today is very strong
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and would not let that happen. overtime we hope new board members and ceos will make sure that doesn't happen. >> is it fair to say you are developing a culture that is anti-afp? >> we are developing a culture that is anti-taking inordate risks that would jeopardize the quality of our businesses when the businesses we are and make guarantees to people, sometimes for their lifetime. >> in doing that are you making any effort to separate risk from reward, so if you have an employee who comes up with a brilliant idea like someone did at s.b. and credit default swaps, where they are paid a huge bonus let's say in year one for doing the deal, the deal blows up four years later? is that still possible? >> it was impossible before either. i think i need to clear up something. when you look at aig in the people at aig the 10 people that reported to me when i got there,
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those 10 people plus $168 million of their prior pay because of what happened at that fp. they lost 168 million. five sior people at fp, those five people lost $88 million of their prior pay. their pay has always been at risk for a five-year pure mac of time through stock and cash plan so you have got to have something other than pay. you have to reward pay. you have to have risk in the pay process. you have to have controls but at the endf the day the real challenge is to make sure you have good risk management and good managemt of the company and not rely on the compensation system either way. we have to run the company the right way so i can tell you what fp that was never the case of getting rewarded in one year. >> never the case? >> never the case. >> doesn't seem from what i've read a least in the press that 2:45 in the afternoon there were some guys in the 14th hole hitting off because they made a lot of mone at that fp and then
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left. but they left the damage behind. >> there are people who work there and i will tell you in the last five years, most of their compensation was wiped out. in fact he would bonuses, 40% goes to the deferred comp plan which is so negative it will never see the light of day so people today are still losing pay for what happened in the past. unfortunately there are people that cause the problems that aren't there. my point is that it's a shame we pick of the people trying to get the job done so i can only tell you the people that are less, even the person that ran it lost almost 70 million of his prior pay but he got a lot of money from prior years, no question about it. at the end of the day my concern is, it is not about their ay. is about the fact we should have strong risk management in a company that doesn't overleveraged itself and to allows the company to leverage a aaa--.
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>> okay, thank you. >> mr. silvers. >> i would like to come back to this question and look at it a different way. last fall, the federal reserve system promulgated a set of principles around pay and indicated that they, the fed was going to be looking at pay and financial institutions they regulated, basically looking at two issues, risk and time horizo. what processes do you have in place as an entity, a unique relationship with the federal reserve system, what processes do you have in place and what if anything is the fed doing to oversee them in relatn to those policies? >> i believe that the fed is overseeing not only are compensation policies but i will tell you first and foremost that they are in every aspect of our business, rightfully so because
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we all get a lot of money. i will also tell you i believe the working relationship with them is extremely professional and very effective. they have been terrific. they watch everything we are doing and everything we are working through. >> tell me exactly what that means in relation to compensation policy. how was that oversight manifested? >> first of all we can start with ken feinberg. ken feinberg deals with the way we are paying the top 100 people. >> yes but i'm talking about the fed in the fed's relationship, implementation of their policy. >> they are aware for compensation plans. we share within the long-term the long-term incentive plans. we talk about devasting, we talk about how we are doing it. all of ourlans are presented to them and they are aware of the things we are doing. >> to pick up on my colleaes question about this sort of downside exposure. yo described that some individuals made money at aig
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during the boom period, and then lost it during the bust. i don't doubt that at is true. if you look at it though from the beginning of the progress-- process, the moment people make decisions as executives in taking risk off again is the upside. you don't seem to describe any kind of actual downside. so my question is, going forward, how do you build real downside against, round risk for your senior employees, and how do you do avoid this asymmetry where everything that is all about how much you gain and the comp plan can't really embody the notion of a loss that investors in your company are ultimately the public and peers will bear? >> i think it is a question of how you design your goals and you design things so for example if you have part of the company
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where they are incentiveo create operating earnings and that is all they are asked to do then they will do that. they may also make that part of of the business insolvent. they also may not choose to clean out the inventory of some antiquated product and therefore they are not taking losses that they should take so you have to decide near compensation program that takes risks into account, sets parameters of what those risks are and you have to manage it. you get out what the compensation program drive results and that is why for example in the securities industry i've always been against just revenue compensation because they think they don't talk about risk and they don't talk about bottom line. >> how do you do true downside? >> where would you like downside to be? >> from an investor perspective downside is downside. i put up money and if i lose, i lose. if you think about it graphically, i have real downside exposure and real upside exposure.
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most executive pay plans i'm familiar with that purport to be performance-based or to tie compensation to performance have only the upside of that line. they don't have the downside, and that creates situations my colleague mr. mcwatters was referring to where executives are not really fully exposed to the risk that investors are exposed to in the public is exposed to. i'm just curious if you have a solution to this problem given the stakes involved for aig and for the country? >> i think when you have stock ownership, if you want to have downside, if you look at what happened to the associates at aig people have been there their whole careers, have been totally wiped out. through no fault of their own. ep in mind there were 44,000 trades, less than 125 are dead. almost all the people at fp, 100,000 employees at aig suffered huge losses in various forms because of what happened. a lot of them are owned aig stock stock either in their
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401(k)'s, their bonus plans or their stock plans. i would say they were huge losses taken by people that own the company. you on the company and if you screwed up you are going to lose money. >> my time is up but i don't think that is exactly what happened. people lost some of the money they made is not the same thing of their prospective investors at the public risking losing money they brought to the table. it is quite different. thank you. >> professor toske. >> one of the advantages of going last is i get to ask all the questions. i don't have verymany left but i guess i do have one and that would be does a -- make aig fp still pose a threat to the overall company? >> i believe aig fp's threat at the beginning of 09, was probably a 2,222,000,000,000-dollar cash call. that has been reduced to almost 4 billion. >> so there is still delay risked?
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>> i think the greatest risk is downgrade. that is why operating results are important. i think it is manageable. i will continue to-- and then the rest of it gets absorbed into the rest of the company has investments would have to wait until the duration gets their. >> thank you. >> thank you very much mr. benmosche. we appreciate you coming and we will hold the record open. >> thank you are a much. >> thank you. mr. moriarty. we now call ourifth and for the day final panel. jim moriarty, chief restructuring officer of the u.s. department of treasury. have you found a comfortable place? i think you found a low chair, sir. better you are shorter than i
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recall. there you go. there we go. much better. when you are ready, if you could give us an opening statement and holder to five minutes please. >> chair warning members of the panel thank you for the opportunity to testify. since joining the treasury department of may 2006 i have been-- 2009, sorry, i've been-- i've ben primarily responsible for everything the taxpayers significant investment and american international group. as you know prior to joining the treasury department spent 28 years working in the private sector so basically on financial restructuring. i will use my time today briefly to outline our curren commitments to aig, the company's restructuring plan in the exit strategy. the federal reserve bank of new york and treasury department have extended $132 billion of financial support aig. the new york that is provided
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83 billion support, 26 billion of which represents loans outstanding to the parent company, 25 billion of which represents preferred interest in aig's two largest international life insurance subsidiaries and $31 billion of which represents loans to two special purpose vehicles form to require troubled assets from aig in november 2000 a.. the treasury is provided 49 billion in the form of cod and preferred stock. in addition the aig credit facility trust established for the benefit of the taxpayers in connection with thoriginal funding of the new york federal reserve credit facility holds aig preferred stock which represents approximately 80% of aig's outstanding common stock a fully diluted basis. the substantial financial commitment has enabled aig to remain a concern with the investment grade rating however without government support because of the leverage in risk associated with its financial product siness it would not have an investment grade rating
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that is critical to the competitiveness of its insurance subsidiaries therefore the objective of the compa's restructuring plan is to restructure its business profile so i can sustain a grade rating on its own thereby permitting the government to exit supportive monetize its investments. the restructuring plan has six essential compents. first the company will have to substantially reduce its debt or asset-- next the company will have to demonstrate independent access for the capital markets and secure standby lines of credit. third to to wind down of aig fp will have to be substantially completed. fourth aig will need to do destiny potential cash needs or credit ratings representing a drag on the ompany rating. fifth the company was to demonstrate itscore insurance subsidiaries are profitable well-capitalized and have repaired the damage to their franchises. finally the company will have to demonstrate it has improved its
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risk management procedures and practices. today as you have heard, aig has made significant progress of each critical front. the pending aia and ella co-divestitures will result in a balance sheet of facilitated access to third-party capital. aig's this is that taxes for long-term debt market allowing them to refinance maturing debt and make their own needs without recourse from the parent. the wind down of fps made significant progress in targeted completion by. the core businesses of aig's future and its risk management practices have improved. at the conclusion of this process once again sustain an investment grade rating without government support the government will-- whether we get all of her money back is an open question. let me briefly review where we stand today. if they ella co-to best assures
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should be sufficient to repay the new york fed facility and retain the preferred interest and calico with interest and dividends. cash flow. [inaudible] as a result that it seems very likely that the $83 billion of outstanding fed support will be paid in full. similarly at current market prices common stock at at the sirri c represents has value. market conditions may change before the trustees have the opportunity to sell the stock and a very selling of the stock given how much they have will put significant downward selling pressure on the price of aig's common stock at the stock rucker today suggest there is real value there. finally that leaves the treasury
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and f.-- 49 billion. the timing of our abilities to monetize will depend on the pace at which the restructuring plan our conference. whether treasury recovers all of its investment makes a profit while in large part depend on the company's operating performance and market multiples for insurance companies have the time the government sells its interests. >> mr. milstein, do you wanto give me another sentence? >> one more sentence. assumes we are confident aig can stand alone we will move to exit is promptly as practicable. now i am ready for your questions. >> there we go. let me just get started here. i want to walk through thi. i'm hearing you say it is very likely the american taxpayer will be repaid in full from aig? is that what i heard you say? >> what i said is that the new york fed which has $83 billion outstanding today is very likely to be paid in full. the asset values we have seen,
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the sales prices for aia and ella co-should be so distant to pay them in full. >> that is not everyone though. >> the treasury department has 49 billion outstanding and as i said in my testimony the recovery will depend on the performance of the remaining businesses and how those businesses are valued in the market at the time. >> so do you have any estimate at this point? you have heard the estimates and refer to the multiple times from cbo. >> i have. i think there are substantial, there are a lot of things that have to occur before we will know the answers that question question and as you have heard from the ktbw analyst today common stock has a value of $5. while that may be a lower stock price than the company's trading today, that implies the money is good and even at that 5-dollar stock price, this series c
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preferred held by the series c tress which have a value of $3 billion is pure profit to the taxpayer. >> since i i see you wince and hesitate on the second number, that is you feel confident about the 83 billion-dollar repayment and a less confident about the $49 billion? do you feel that mr. benmosche is a bit optimist? >> he knows the business better than i do, and if he can in fact. >> you are principally responsible for overeing him though. >> he is an experienced insurance-- he knows his business is better than i do and his competence confidence that he can get sunamerica financial to an 8 billion-dollar net after-tax hurting if he can do that we are going to be paid in full. >> all right. what you see athe big shrift here?
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i know you have laid out some of the things that pretty see the biggest risk? >> the biggest risk for an insurance company are the state of the financial markets and the big infected has some big franchise values. remember a insurance company writes long dated risk and it takes premiums and invest in a variety of financial assets. the markets go up, the assets go down, the assets are impaired so the fortunes of this company impart rise on the performance of the financial markets. we are obviously in follows will times now, so to me that is the >> so the american taxpayer is on this ride, along with the up-and-down of the stock market? >> there is no question we have made a substantial invtment in the largest insurance company in the world. and did that for in my view to preve a further catastrophe in the financial market. i think it has been very successful. we have stabilized aig, and he
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returns on that investment and on that policy approach will depend on the future performance of the company which in part depends on the performance of the market. >> actually since we are hearg a lot of good news here, the preferred stocks helped the treasury are not paying for accumulating dividends, and that means that we the american taxpayer had given up about $5 billion in foregone cash? why is treasury chosen that course? >> that is a little more complicated than that. remember we own 80% of the common stock so the giving up of dividends on the preferred is really just giving up 20% of them because the value of that dividend would otherwise go to the preferred and we own 80% of the common stock or could. >> wait, wait though. you are saying we gave away
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$1 billionof the aig shareholders by not collecting the dividends that belonged to the taxpayer? >> chair warren with all due respect we haven't given away anything. the company could not afford to pay. >> i am hearing so much optimistic news. that cost us $5 billion. >> hasn't cost us anything. they were dividends they could not afford to pay. >> all right, and you are saying that that is the right because we are still going to sit in the common shareholder position? >> had they beenable to pay the dividend they would first have to bring the preferred dividend current before they could pay a dividend to the common stock and that is where we are today, but at this point, at this point the company's cash flow, its net income after taxes are insufficient to support his preferred dividend. >> where do you anticipate between this optimistic view of aig prepaying the american taxpayer in full and the position where we are today
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which is they can't pay the dividendwed? where are we going to cross that line, where we don't continue to lose money from a company that can't pay is dividends that it owes us? >> i laid out sick steps in the restructuring plan. if you would just bear with me for a minute. what is going on is a resolution of a large financial company, and th resolution involves its downsizing. we are selling stuff to pay back debt. selling aia and alico. we have a sale transaction through the life insurance operations in taiwan. we have so buildings in real estate around the world. >> i understand that. i afraid to report. >> bear with me. it takes time to take a company of this size and scope to get it down to a foot print where it is actually reduced its debt,
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reduces leverage, reduced its risk. >> understand that, that is why ask the question. the question was, i hear this enormous optimism was suggesting that some kind ofplan in mind and aig has a plan in mind. for where it will end up and what i see today is that it is not able to pay the dividends on those preferred shares so what i'm asking is when in this downsizing do expect those two to cross over so it can at least meet its obligation before the happy day comes that pays us back in full? >> if they aia it à la co-deals closed it will likely close sometime in the third or fourth quarter of this year, so that will result in an immeate paydown of the federal reserve facility, the preferred interest at à la co-and that is 25 billion will be immediately retired with the cash proceeds, and the balance of the
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consideration can be sold given the terms negotiated over the course of a year to a year and a half. when those proceeds are realized they should be sufficient to pay off the credit facilities parent level in full so sometime i wod expect in 2011 that if those deals close, the federal reserve bank will be paid in full for all of its existing exposure to aig. >> mr. mcwatters? >> thank you. mr. moriarty, when the deal was struck in september, current shareholders of aig stayed in place. it was not a bankruptcy. they weren't wiped out. so today we have theituation
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of pre-bailout shareholders. they may live to collect dividends sunday, and may live to sell their stock for-profit come even though the taxpayers they lose cbo $36 million, omb $50 million. is that correct? >> well,et me just-- if in fact the preferred stock interest loses money it is unlily they are going to get anything in the way of balance sheet is construct did, the preferred stockholders are going to g paid first before the common stockholders get anything. it is true that the stock is trading, common state-- stock is trading. no dividends are being paid on that stock, so it is a bet on the company's future. >> given it is trading for $33 a are today, there must be a lot of people, a lot of smart people, a lot of analysts who
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think the current stock will be reid. >> that would be the inference you withdraw, yes. so that is good news for the taxpayer. the common stock is suggesting preferred stock is money good. >> okay, but the equity, the pre-bailout uity was not wiped out in the steel. >> it was substantially diluted. substantially diluted but not wiped out. >> if i y though, you have to take the price of the common markets that. the 80% of the stock that represents, represented either theory see, if you value that at the $33 a share at which the common stock market is trading the outstanding flow, that is an 18 billion-dollar profit to the taxpayer for the privilege of having made all creditors whole and for having put a wallop around this company to keep it
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from failing. you know, if that is how it plays out i think all of you would agree, all you would agree that this was a very successful rescue. >> was only successful because the taxpayers got lucky. if we go back to september the 16th and we start looking at the credit cbo's and start looking at the rmbs, that was junk. nobody wanted it because it was not a market. we had no idea what it was worth it was simply purchase because it had to be purchased. the fact that it appreciated, that is to our benefit and that is gat but that was far from insured or guaranteed at the time. >> listen, i was a private citizen at the time this rescue occurred, so i have no greater involvement with it than you did and i stood back probably the same distance from it that you did but if you listen to the testimony of my colleagues, my now colleagues at the federal reserve what you hear them tell
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you is this wasn't done to make a profit. it wasn't done for the protection of goldman chs or jpmorgan or any of the other counterparties. for the protection of the financial system of this country to try to prevent a panic. the panic that had already started that would would have bn worsened and exacerbated had this company failed. and i believe that. >> i agree on that is the reason i said in my opening statement that if you-- at the subsidies-- supposition is to save the world financial system, the world financial system is goldman sachs and jpmorgan in some other so the world financial system had collapsed, these institutions would have collapsed so it was certainly in their best interest to have to have aig buildout and if they can be bailed out at 100 cents on the dollar it is a happy day. >> i understand the ambivalence
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about the view that aig is a vehicle to pay other large financial institutions but if you believe that its collapse would have created fear and panic across all financial markets, then it wasn't just goldman sachs and jpmorgan who were being helped by this rescue. it with you and i, the depositors in our banks and insurance policyholders across aig and every other insurance company. it was the tensionayers whose pension plans were racked by aig fp. it was the holders of stable value funds. >> i totally agree with what you are saying that none of those those folks you just mentioned got the wire transfer from goldman sachs and the others did >> in fact though they did comment that they did because the 44,000 trades thatr. benmosche talked about include all the stable value insurance that fps on it. it includes the various transactions they did with
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pension funds to assure their assets to back. three single them out because they happen to have held very volatile assets on aig insured and the decline in the price of which were running through aig's income statement and creating enormous losses inthe fourth quarter 2008. so in order to try to mitigate the losses that aig nd in order to try to stabilize its balance sheet, the federal reserve went after these two asset classes that were causing losses in such an stability and try to buy them at those prices, to terminate the losses going forward so as to try to keep his company from needinmore money and becoming even more unstable so yes goldman sachs and the other counterparties to those rmbs and to the cdo's got paid, but it was part of a broader effort to
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stabilize this company so they cod honor everybody's contracts and pull. they weren't the only parties whose contract were honored in full. everybody's in september 2008 have had their contracts honored by aig. >> mr. mcwatters? >> i understand. now and then. >> mr. silvers? >> i wasn't planning to assess but i feel compelled to do so. i notice mr. waters didn't bring up goldman sachs or jpmorgan so obviously it is on treasury's mind. is it not the case that in the week of september 15, that the cash calls that the company could not meet were in the two lines of business in two lines of business only and but for those cash calls none of this would have been necessary and those two lines of business, and it depends, believe it or not
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but you can argue against the insurance ate regulators. they certainly were they-- in may have been the securities lending and but for those two enterprises, none of this would have occurred. >> not so. >> are you seriously asserting that if you wipe those two pieces of business is off the book that aig was nonetheless insolvent? are you accusing the insurance commissioner of lying? i am astounded at the links you will go to defend somethg that may in fact be indefensible. >> actually have sat through the entire hearing today. i have heard the testimony of all the expert witnesses and fact witnesses before you, and i have spent a year now with this company's balance sheet and understanding its liability structure and i want to give you the benefit of my learning.
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all of the contracts that aig has pr guaranteed by parent. the parent has a 100 billion-dollar balance sheet of its own and on september 82008 with $15 billion a commercial pay, we know what haened to the commercial paper markets after lehman brothers filed and defaulted on $5 million in commercial paper. $15 billion in commercial paper at the parent company, $80 billion of free poe, gimme repo markets went into seizure after lehman brothers filing and am much smaller amount of repo. $2 trillion of derivatives, 400 billion of credit derivatives concentrated very much in the real estate part of the market. had aig fp defaulted on the collateral requirements that it have on september 16th, every
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counterparty, 44,000 trades could have terminated. >> mr. milstein, you are not paying attention to what i was asking. you actually agreed with me. what you said is thatyou set all kinds of terrible things would have happened had they defaulted on the collateral posting obligations but the collateral posting obligations were they triggering issues, right? >> the collateral posting obligations were triggered by the downgrade. >> guess i know that but that is where the cash need was that we. all the witnesses, all day long have said this. >> in e security refused to roll over. >> we all agree. let me move to the presence. as my colleagues have expressed, there are these estimates from
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the government accounting bodies that 30 billi or 50 billion-dollar losses is likely. it appears from your testimony that but what that really means is, that they believe that they preferred, the series e. mack is worthless and in a better case scenario they believe that it is worth 40% of the face. and my understanding their point if you correctly? i know it is a little unfair to ask you what they tnk that is that essentially what that means? >> it is only worth 30 and there will be a 20 billion-dollar loss. >> explain to me why do you think they are wrong, because early you do. >> well no, i don't think any of those can predict the future. i think the government accounting office, under the regulations bear subject to they
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ve have to make estimates for the budgetary accounting, and i suspect they are being conservative in their view. i am working to get the taxpayers money back. i think we have, the company has a restructuring plan that they have worked on us and it is going to take time to implement, but and we have spt a lot of time on it, if they can implement it leaves them as an investment-gde company and that they can perform, if the two core businesses can perform the way mr. benmosche suggested they can, they should do very well. >> my ti is up, thank you. >> professor toske. >> to continue on a related line and you were here fr mr. gallant's testimony and his estimate of what the stock price should be.
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can you sort of respond to that a little? apparently you disagree with him as well. i don't know whether you have had a chance to look at his esmate and they are widely different estimates. i recognize, understand how we come up with different estimates and we are making dierent assessments about the outcome. >> i have seen at work, and it is built on a number of assumptions,. >> can you tell me which on she would quibble with? >> in part i'm constrained not to quibble with any particular assumption because i actually know more than he does. i have much more nonpublic information. is a publicly traded stock and it would be inapprriate for me to do so. >> okay. i respect that. can you give us some broad indication that you are comfortable with, where you think there are differences that you might have?
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>> from my point of view representing the-- i take comfort from his conclusion that the stock had positive value because it means the interest time trying to recover going to be paid in full and it also means the stock has realvalue and that is pure profit to the taxpayers. >> okay. so i guess, i believe you answered chairman warren's question about when you thought the aig will no longer need government support. was your estimate in 2011? you said it would cross the light and. >> i think the deleveraging that is predicate to be able to garner a stand-alone investment rating is dependent upon these major asset sales closing and are monetizing the value of the stock we are taking back in those deals. and i see that occurring sometime between year-end this
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here and here in the next year when we fully monetize those interests. >> therefore, if it has got his leverage profile, that is its coverage to a point that looks like an investment great company that i think we can begin assuming the other elements other structuring plan that i outlined which is this independent access to capital. the parent company starts tapping the credit and capital markets independent of the government. i think thats when we can start thinking about exiting. >> mr. gallant also said he thought the share price, the current share price affected the traders believe that the government was going to walk away leaving, giving another gift to aig and. >> i think you can be certain that that is not going to occur. >> okay. let me change yours just a little.
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you are an expert in restructuring. and you were not in the room at the time, as you made clear, but had you been, would you have done anything different? >> yeah, mr. benmosche and i go back a long way together. we have been on opposite sides of the table and on the same side of the table on numerous occasions. i thk that his confidence in the ability to actually have a discount negotiation with 16 counterparties is misplaced. during it, in part because they think he's simplified some of the assumptions on which his analysis relies. during the period from september to november, when he assumes we have that three months the
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federal reserve and government would have had the three months to conduct a negotiation, collateral was required to be posted almost every other day. .. cross default. so while you could have gathered to the 16 major counterparties
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in a room and have a negotiation i can tell youhat the time i was actually, putting a similar negotiation to that which is with reserve to aig after nine months of negotiating with that very same group over the extent of the discounts and how it would be done and an entirely different situation but most important with aig the company would have had to be prepared to take the risk of nonpayment and have that nonpayment put at risk every other debt instrument that had a cross default at the level and fp and if i may i know where you are coming. if i made that would have made the company completely unstable. any predator a cross default could have brought the house of cards down. >> if i can just follow up on that, you were talking about negotiating the same thing.
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were you negotiating something like that with the government backstop behind it where the government sd i will mature between us we get paid so long as you don't cross default and bring the company down. does that change the negotiating dynamic somewhat? the care it the size of manhattan and a stick the size of the global economy. >> i'm not sure uncomfortable with as a citizen with the federal reserve using that power to pick and choose winners. >> i'm sorry for you uncomfortable with the long term capital management? >> the government didn't put money on its attrition. >> the government had nothing to do with what happened on the management? they were in the room and sat nobody leaves the room until there is a deal done here. >> i know it is tempng to believe the government could have made this possible and extracted discounts, but just assume with me for the moment
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among the creditors have crossed the fault rights with not the territorial limits of the united states who held material claim and didn't care about the government of the united stat or its policies wanted just to protecits rights to payment. >> and this is -- you weren't there, i wasn't there this is increase the conversation to have but howwas that person going to enforce those rights? either they had collateral which to hang on to them or they have to go to court and i think you and i have an idea how long that takes. >> by understand that. i a understand that this is a huge balance sheet with numerous creditors. >> is this what bakruptcy lawyers do for a living. >> i understand and i did this for a living. i can tell you that i would have been very nervous. >> who wouldn't have been nervous.
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>> about threatening the fault or even defaulting without being prepared to put in the bankruptcy because he would be putting the holders of claims and $100 billion of 2 trillion a notional derivative of the table on the first default. >> let me see this may be an an artful but from that point i want to go to another one that you make and that is the question -- its i ron mix aig is in the insurance business because the american tax payer and it up in the insurance business. they ended up answering in effect that aig's creditors were going to get paid 100 cents on the dollar, and so i'm wondering what was the value of that insurance? what is the value of the guarantee we wo't let your company fail? you described potentially hearing 18 billion-dollar profit accept it treats the insurance policy that came from the american tax payers worth
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nothing. >> i think we are coming at thi from two different frames of reference and again having spent time with the federal reserve and understanding what they thought they were giving up the time and in 2008, i don't think they thought they were underwriting the creditor recovery and aig. they thought they were preventing a meltdown of the financial system, and a consequence of that was that everybody at aig had to get paid bause just imagine that the government had tried to extract concessions from majo counterparties, other systemically significant firms get business with aig. but with the risk have been then? what would be the inference other creditors of those institutions would drop? >> i'm sorry, mr. millstein. we've been around this before but the question is what is the value of the guaranteed that the american tax payer put into this? you describe the profit of
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18 billion. potentially billion, and i just want to put it against -- you treat the guarantee from the american taxpayers as if it costs nothing. >> i think the benefit -- this is the benefit to the american taxpayer the crisis we have lived through had been horrible impact on the economy wasn't worse and it turns out the cost of this operation with aig is that there isome cost to read in the billions of dollars i hope it won't be. that was money well spent in the sense of avoiding what could have been a much worse crisis. >> i have one small question to finish with and that is you can't tell us why mr. gallant is wrong, and i understand the reason for that. others agree with mr. gallant and others do not the market is treating someone else but i would like your advice what he would offer to an oversight panel. are we supposed to your word for
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it that it's going to work out ne? how do we've got to be the different points of view if you can't give us anything more specific? >> the question i think you need to ask yourself today is as a result of the government's actions is the country to the stable the answer is yes is it improving? yes. is it executing against the restructuring plan? yes. is it moving to a position where it can give up on its government support and stand alon yes. are there risks? certainly. a company of this size and scope can't help have risk to its income and a financial performance but in terms of where it was and where it's going it's making progress. >> so when people ask whether or not the american taxpayer is going to get repaid, the answer is we don't know we don't have anything to look at? >> i think you can say with confidence the federal reserve is going to be paid in full. u can say that the -- you can
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say -- it was a comma, not a period -- that a well respected analyst came into your hearing and said basically the emf is a to be paid in full and the government sees it is worth something. >> but there will be losses. you think they are going to get paid in full and that the cbo estimated it is simply wrong? >> if he believes the stock as a positive value what i am going to get recover discreet be recovered. spec okay. thank you, mr. speed. mr. silvers? no, i'm sorry -- [inaudible] >> this means that aig is solvent in your opinion? inhe opinion of the department of treury. sprick it is a legal term that has a positive net worth and is
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paying the debt as they come due. >> fair enough. >> aig appears to me like it is still too big to fail what are you doing as a majority shareholder to the risk? >> i think if the restructuring plan that we have worked with the company on designing and implementing is a plan that is downsizing this company relatively rapidly. we are selling off its international life operations, the efp has no a shadow over its former self but it is about one-third of its former self, and those risks should be wound down substantially by the end of the year. the aircraft and consumer finance businesses are now financing themselves not drawing on the government to finance them and as you heard mr. benmosche say the company last year wasn't necessary to finance. he hoped to people to raise money to refinance this year.
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so the core business of aig at the end of the plan will be on the largest financial casualty company of the world and a very strong annuity and life insurance provider in the united states. a much smaller, much simpler and the company that he's confident he can manage with the health of his board and its much smaller than the company defended confronted in septemb, 2008. >> so if, let's say a year from now, year-and-a-half from now after this has been implemented if aig was to fail again for whatever reason, then a chapter filing under the chapter 11 followed by the insurance regulators to make whatever insurance regulators to in other words, working for a resolution of aig and its insurance subsidiaries would seem to work.
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in other words, there is nothing out there that would start triggering te dominoes that take down the other too big to fail to institutions. >> it's the plan i don't mind that has been implemented and the environment stage is relatively friendly as it is today. i think it's not to me to make a systemic risk determination that it seems to me this will be much less of a risk to the system than it was in september 2008. >> what are the consequences on the competitors of aig's insurance business who have received perhaps a subsidy that least with aig subsidies from the u.s. taxpayers if you are competing against aig insurance business what is the consequence? >> it's a pretty competitive business and in some sense i thk aig is burdened by its government ownership in the
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competition it has with other insurance companies. i think we are not and natural holder we are reluctant owner but still a majority and yu know when the government of the united states rolls over, you might not like being underneath so i think the answer is -- i think the sooner they can shed us the more competitive the will be. >> there's no indication to you that the rate or the underwriting standard aig -- there was some chatter, and you heard some noise about that in the market place shortly after in the early 2009. you haven't heard that since. >> okay. i'm done. >> mr. silvers. >> mr. millstein, aig is the only participant in the treasury department program, systemically significant failing institutions program. what are -- this might seem
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silly after the day's worth of testimony but it's not. what are the characteristics of aig that made it an ssfi? for a company that you're going to take a majority of and invest $32 billion to eate a ogram called failing institution it is a little contrary to the objective of getting your money that. i don't know her name did that. i, myself, don't tend to use it a lot as the program description it is the aig program. >> but the fact that was the only participant in that program, the only institution my colleagues have mad-- mr. mcwatters was talking about how the treasury left 20% of the common stockhoers intact that was actually pretty tough treatment in relation to what happened witother people and treasury at the time
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articulated to this panel and i know it is a different ad in a station that there is continuity, to this panel aig was different. you disagree and think that aig wasn't different? >> i don't know what was in their mind in that regard. in terms of taking the common stock? >> why does aig have a unique program all to itself? >> i don't know. i mean you know, we have -- the federal reserve was with the lender of last resort here first -- estimate this goes back to my question this morning sort of about what is thought, you know, what is the genesis of here? what is the -- when do things get set in stone? you seem to be seeing you guys in the treasury inherited circumstance created by the fed.
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>> i think the sequence in written testimony later found in the tataris, and again this is a sort of advertisement for a regulatory reform resolution regime, because in september 2008 the government didn't really have the tools to resolve an institution of this size. the federal reserve could make a loan but you didn't really have the tools to put it to it quietl -- put it to bed quietly. >> a think it's critical fact that you can't keep a clear answer to the question of -- and i understand why. it's not a criticism of you necessarily. but the fact that there is not a clear answer that can be articulate it across the administration's to why was it aig got unique treatment is a problem negative and.
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and i just -- it's an observation. i want to shift to something you said earlier in response to one of my colleague's questions. you said you had to think about the impact on other systemically significant firms during the period in september, 2008. but firms are you talking about? >> i did say that but i said it in the context of warren's questioning that we assure all of aig creditors for the bailout. and again, what i was trying to convey their is i don't think that was a consequenceof what we do. i don't think that was the intent of policy. the intent was to draw a line and prevent further collapse of the system and they drew the line at aig. and at the next point i was going to try to make was that if and as some have urged the
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government in november or somewhere else along the way try to extract cncessions from the aig creditors having intevened in aig would that have communicated the broad market about the government role with rerd to other firs the other large institutions which by then have made investments in what they have promod financial stability to think for the markets to think that the government was going to turnaround for all of the large financial institutions which it didn't own the preferred stock and demand a creditor concessions? would that have encouraged financial intermediation or discourage? what it promote stability or promote instability? i submit it for an official government policy there we were going to use our ownership stakes in these large institutions to demand concessions from their creditors i think you would have had risk running away from those
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companies that the contagion associated with the government policy would have been the enormous. >> i'm sorry i think -- >> it would have discouraged people from doing business with our large financial firms. >> the point is about the death the lead could that it existed prior to the government putting its money on the table this is like financing the haircut is for those who were dealing with the company so that you get market discipline so you keep some market discipline and the government says we are going to provide the backstop and forward but we are not paying off the people who understo the risks they were taking at least not taking them off 100 cents on the dollar. >> but, chairwoman, you know and i know the task knows the financial and institutions don't have a long-term debt. the debt is coming in and out every day. so once you communicate to the
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financial markets that these large institutions are going to be required eckert kutz, the people lending money on a short-term basis withdraw their credit. they withdraw their credit. >> not from aig. you are talking about the other participants in the market. but the government says i'm putting money on the tle and the money will be available to backstop the creditors there's been no indicati the government has never backed off from that and indeed we worked repeatedly in every meeting we had with the fed that they could not back off. that is why the decisions made in september had to be followed through in november in the way that they did. >> but if i may, you may have been urging or at least inquiring whether or not they should have been something different and what i am suggting to you that they have done their short-term creditors would have run on them before you could have asked me i have a discount. >> i.t. we simply have to agree to see the world differently. i apologize.
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professor troske? >> as a professional economist, i don't deal with inividual companies. i sort of look in the economy and going forward, but when i hear comments that my colleagues on the panel are making what i think about it is the moral hazard problem going forward, the fact that when the government consistently makes creditors whole, creditors play an important regulatory role in the market economy and that they regulate the performance of the people they are lending money to. if the creditors don't believe that's important because the government is going to bail them out the no longer mix of regulatory role and then we have to create a government structure to regulate which is challenging and it's cheaper for the taayers and creditors actually to do the regulation for them and i would arue much more
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efficient. can you sort of -- you talked about this instance pick can you may be expand a little on the moral hazard that is introduced by what we have done? i'm not sure i would agree with your statement that even if we get paid off a make a profit we are better off once you considerthat dynamic. >> i think if we felt this episode with american economic history with strong regulatory reform we will have created and compounded the problems that exist in early september 2008 before aig was bailed out the system that allowed without any capital behind that allowed it to leverage itself up the we've had without any effective holding company regulator supervising it and demanding that it have the capitol and liquidity to support the risks
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it was underwriting. that system you could argue created the moral hazard that certainly s been compounded by what occurred. so we need to have the regulatory reform package to counter what has occurred and make sure this doesn't happen. >> i would disagree with you. i think that if the government has consistently allowed creditors to fail and long-te capital back over the last 30 years, then we wold have regulators the would be called a creditors and the problem but in texas than the first place because the creditors of aig would have taken an active role assuring that the company didn't get in the problems in the first place and the solution you're proposing is for the government to do what and how your creditors to do the job to how your regulators to do the job the creditors should have been doing is going to produce a much more ierior solution to the one we have if we allow the market to function.
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>> i agree with what you said. but when firms of this size fail defects that are enormous so when i say as strong for the tory reform i mean everything that can contain the effect of the failure the size of the firm. >> and then offers a sad way to my next question which is a fairly general question i want to ask. i have heard the term systemic used more often since i've been appointed to this panel than i have in my entire previous life. but i have yet to see an operational definition that would allow me o know what systemic front looks like and what one doesn't look like and if you seem to be arguing that we need regulatory regime that regulates systemic firms to offer systemic risk to do that i
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think we need a definition. and i would love for someone to give me one and you are sitting here so i'm asking you, sorry about that -- >> i would love to take the bait and join issue with you on that but i think we don't have the time. and i think it's important to the bill asses. i think you will see what emerged from the systemic risk regulator tt is -- >> you think we are going to come up with a definition. >> i would be happy if we did and which the government basically says these are the firms we are going to backstops we know themoral hazard is here and it reveals were not and we got this dynamic. i guess i am less confident than you that that is going to our life. >> i think that premise is wrong and some people worry about the systematic dissipation that no we are not going to backsto you were in their revoluti regime where your going to be
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put to bed and have living wlls or whatever you want to call it but severe regulatory oversight toprevent having to do with aig again. >> thank you. i appreciate you being here today. this hearing is concluded. we will hold the record open for questions and additiol docuntation from the various witnesses. hearing adjourned. [inaudible conversations]
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>> listen instead of hear. and always keep one thing in mind. until you become the chief executive officer of general motors, it is more important for you to watch and listen then it is for you to talk. i have enjoyed sharing some thoughts with you here this morning. i have a great appreciation for the honor bestowed upon me.
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i have a great respect for how well prepared you 360 people are to go into life. work in such a way that you'll enjoy the next years. thank you very much. [applause] >> dr. david walton addresses graduates where he graduated in 1998. this is about 25 minutes. >> distinguished alumni,
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colleagues, faculty, family, friends, and the class of 2010, thank you for having me. in one of the greatest -- is one of the greatest honors of my life to be here with you today. it was a bit of a shock when i found i was asked to speak at this graduation. i have multiple e-mail accounts and the one that this college goes to is the fifth of five e- mail accounts, the one where all the spam goes to. i happen to be looking at that e-mail account when i found -- i found an e-mail surely after reading an e-mail were a was offered $6 million by a nigerian prince.
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i then did what any could miss western boy would do, i called my mother to share the news. i told her i was already incredibly nervous. she said, you should be nervous. you have not given the college a dime since you graduated. [laughter] i am embarrassed to admit it is true. i will be a regular contributor to the college after today. [applause] last night, none of us could remember who spoke at my own commencement. that itrrassed to amid was a physician.
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it does not bode well for may the key for me today is brevity. i am one of the few things standing between you and a diploma that you so richly deserve. it is unlikely that you will remember what i said in a couple of years' time. in fact, after months of agonizing about what i would say, most of these words were written this week while i was in haiti. i have spent most of my time. i was not in haiti when the earthquake hit. i heard the news of the earthquake and i flew down to
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the dominican republic and was able to cross over to the border in haiti on the 14th. i began working in haiti but surely there after leaving augustana, but nothing i had seemed prepared me for the devastation that was brought on by the earthquake. thought to be the worst natural disaster in this hemisphere in over a century. a full 48 hours after the quake first hit, the first thing i noticed after exiting the plane was the smell, which was overwhelming. the bodies littered the streets. that morning i made it to one of the few hospitals still standing. people have very severe life
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threatening wounds. head injuries, crushed limbs, and countless other injuries. there were barely any staff or health care providers available, as many of them perished before were digging their own families out of the rubble. aimed to clean wounds in the courtyard of the hospital. for some patients, it was too little, too late. in the ensuing days and weeks, there was some improvement. many medical professionals came down from all around the world, set up field hospitals and went to work treating the sick. thousands of lives were saved. over 250,000 people perished and
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over 1 million were left homeless. since those first few weeks, i have been back and forth frequently. i am joining you today coming straight from haiti because i'm still looking for a direct flight to port-au-prince. this past week in haiti was full of meetings. i looked out of the car, crushed cars, streets filled with rubble, i thought about how i would convey to you what haiti was like four months after the earthquake. we were too busy to look up in the first few days. now, i had time to take stock of
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what has been accomplished. it looked like very little. despite all of the effort that has been put in, haitians during the last several months, every single federal building is still in ruins. the actual government is not faring much better. progress is at a snail's pace. the suffering continues unabated. that brings me to the first of several questions i will pose to you today. in aoes one state in gaugengagd series of movement that is filled with loss? i do not know the answer to that question.
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i was reminded of a conversation if you months ago. someone told me about a book. the author wrote about a conversation with a prisoner of war. he was shot down in 1965 and taken prisoner, where he was tortured for several years. when he was asked -- when collins asked animal stock fell about is coping strategies, stock fell said, i never lost faith. and never doubted that. i knew i would prevail in the end and turn the experience into the defining moment of my life. when he was asked who did not make it out, he said, it is the optimists. they were the ones who said, we will be out by christmas.
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christmas would come and christmas would go. then they said we would be out by easter. easter would come and easter week ago. they died of a broken heart. he said, this is a crucial lesson. te witht never confuse fat the discipline to confront the most brutal facts of your reality, wherever they may be. collins called this strategy the paradox.e haiti is a good example of the stockdale paradox. haiti was the poorest country in the hemisphere. haiti gained its independence,
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the second country in the hemisphere to do so but the first and only country born of a slave revolt. the last 206 years have not been kind to our neighbor. this is documented in the historical record. for most haitians, you might say their lives are characterized by the stockdale paradox. the have some -- they are some of the most impoverished people on the planet. they hope things will improve. but then january 12 happened. most of the people i encountered were as hopeful after the quake as they were before the quake, despite mlosing loved ones and
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livelihood. a pharmacist in the hospital was in port-au-prince learning spanish in an afternoon class when the quake hit. the building he was in collapse. he soon found himself alive but trapped. his left arm was caught under a concrete column. to his left, he saw his spanish teacher. to his right, he saw nothing. the wall had collapsed. he was trapped like this for over 48 hours. i asked him about those 48 hours. his chief concern was his crushed arm, which was painful. after he was pulled from the
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rubble, he was brought to a hospital where he was told his arm needed to be amputated. he is now back in the hospital and learning how to be a pharmacist with one arm and a smile and in the process of being fitted with a prosthetic arm. most of us will not face such a harrowing circumstances. so what can be learned from the stockdale paradox? it is about his unwavering face and courage. if we look back, we can see everywhere wedales love. what kept nelson mandela going? what else but faith and courage
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keeps our brothers and sisters in the war in iraq and afghanistan? what about our parents who work persevered and forced to eat in colored restaurants? what else but faith and courage kept all of our grandparents fighting for the right to vote in this country? what got me through april calculus class? all of you will encounter situations large and small that are seemingly impossible, from finding a job in the midst of a recession to controlling your privacy settings on facebook. these struggles are not only worth fighting for but they are
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important in how the shape our lives. i would not be the person i am today -- i would not be the same person were and not having embarked on a metal career, though i might have more hair. but i would never give up the experiences i have had for anything, nor the hope and faith that things will improve in haiti. my second question is why any of you should care about places like haiti or the homeless in chicago. i am often asked what i chose a career path that is not going to have me on the next episode of "mtv cribs" anytime soon. i have chosen to work in rural
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haiti. i am often asked that question with a great deal of skepticism, but also because i have wondered if there is some conversation that that need to give up some of the creature comforts and work abroad. i did not want to count out the intense years ccd in having some role in my choice is. so, i embarked on the tasks that i told by teachers and attempted to read the bible. i did not get very far. i opened the new testament, read a few pages, lasted about 12 minutes, and then watched "the
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family guy." but i did come upon something profound. the corporal works of mercy. mercy is meant to connote a virtue to have compassion for others' misfortune. it was ironic i would be perusing the bible. my time in haiti, bearing witness to suffering, has caused me to ask a series of questions i cannot answer. the reason i bring this up is not because i loved confessing the things to you, but rather because i believe it corporal works of mercy transcends any particular religion and strikes at the heart of what makes us human. feed the hungry.
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give drink to the thirsty. the naked.nakthe visit the sick. bury the dead. like many proclamations, it is best to think of these more as a framework by which to rely on your moral compass. they can be thought of as a way in which to engage the world around us. we may not know someone in prison, but that should not preclude us from thinking about how we can protect the rights of our fellow citizens who have been incarcerated. we should not use this as an excuse to marginalize the homeless and fell to be advocates on their behalf. we cannot let the conference of
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our own surroundings prevent us from reaching out to others. the core bulwarks of receipt take on a literal meaning when working -- the corporal works take on a literal meaning. what responsibility do we have in this room to people we may not have met? people who come from different cultures or practice different religions? would it be easier if they looked like just or talked like us? it is the very use of us and them that begins to divide us. when you think of your neighbor as others, it is easy to look away from them, or change the channel.
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once the homeless, the hungry, a child with malaria are r relegated to being different from you, the challenge to extend your hand to them is already fraught with difficulty. these are false constructs in trenentrench us. all of us are not members of the bottom billion. those of us here today are some of the luckiest people on the planet. the class of 2010 is like my class. i know each and every one of you have worked hard to get here today. some here are the first in the family to earn a college degree.
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with that privilege comes responsibility. irresponsibility not only to the bottom billions of this world, but some people may need your help in ways you may not even imagine. it is a pretty tall responsibility. collected effort is what is needed. i would doubt there are many in this room that could have gone to this point today without some assistance, someone, somewhere at some time in the last 22 years of your lives extended their hand to help you get to this point. the teachers staying late. a parent who gave up their own pursuits to make sure you could pursue yours. a coach who told you about life on and off the playing field.
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we have all been helped in some form or another. always remember that the help you give to others will make a difference is larger than you can ever imagine. i want to close by discussing personal self efficacy in the quest we have to focus on ourselves. last november i received an e- mail from a professor from augustana. this professor occasionally sends e-mails et al.. he was reflecting on thanksgiving and personal responsibility. he noted -- the problem for many of us is that we have allowed the process of counting our blessings to deteriorate into the habit of counting upon our blessings. we are proud of our titles,
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positions, and resume. we're now overly anxious to maintain our power in this horrible economy. we are proud of our personal achievements. we are anxious to maintain an image of success. when the act of counting our blessings leads to the anxious conditions of counting upon our blessings, it is difficult to be grateful. all of you will leave here today and go on to do incredible things with your lives. focusing on your future, your family, your achievements, and your own success is what we ask and expect of you. we can sometimes err on too much self-focus.
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a comfortable family life. isn't that what most of us want after college? the pursuit of these goals is not mutually exclusive to our responsibility of creating a more equitable world through a framework of social justice. we owe it to our cells to improve our world. -- we owe it to ourselves to improve the world. we hope you'll shape a world that we can be proud of. if we can learn to live with others -- if we can learn to love others as much or more than we love ourselves, i think we will be on the right track. thank you very much. [applause]
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>> clarence thomas addresses graduates. he went to high school in savannah, georgia and advises students on relationships and manners. from the campus of savannah state. i am honored to be at savannah state university. i can still remember during the 1960's come in to savannah state to watch the chicago 5 play basketball.
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i can remember walking across this campus, so i have nothing but wonderful memories of this fine institution. savannah state, as we usually reserved to this wonderful university, was my sole model of higher education during my childhood. there are many other colleges and universities, but in the compartmentalized world of segregation and the myopic vision that accompanies it, this was the one and only realistic school for mae. the few times i was lucky enough to be on this campus, i was inspired by the industrious students and amazed at the thickness of the textbooks. we used to refer to them as the
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big books. for me, it was here that the dream of going to college was first kindled, then gently sustained in those early cross winds of life. i have always had a special place in my heart for this wonderful school, and i could not have been prouder when my late brother and his wife graduated from here in the 1970's. in a sense, your special day is also a special day for me. in thinking about today, i was sobered by the realization that most of the graduates from the undergraduate program had not started the first grade when i went on the court.
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past is faster. in 1971, when i sat where you are sitting today, i was just glad to be done with college. but i know the feeling. happiest day for school for me was graduation. i was scared and anxious about the rest of my life. my grandmother and my mother were there in the stadium at holy cross college to support me and to be at my wedding the next day. absent was the one person i needed there and that was my grandfather. mired in a mixture of anxiety, apprehension, and sadness, i wondered what would happen
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next. how would i repay my student loans? where would i work? where would i live? but somewhere through the fog of confusion, i barely noticed the graduation speaker, author of " the other america: poverty in the united states." he seemed to be telling us to solve the problems of poverty and injustice. as important as those are, i it was focused on whether i would be able to solve my own problems so that i did not become a problem or a burden to others with mine. having sat where you are sitting today, i have no illusions that
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i am at the center of your attention. [laughter] nor do i think that what i have to say it will be long remembered. but i do hundley request a few -- i do hundley request a few moments of attention, recognizing that there is much going on in your lives. i promise i will not cluttered up your special day with my own ruminations about jurisprudence or law. i will say in passing, however, that even today after almost 19 years on the court, many of the lessons that i learned about life in my academics while a student will serve me well. believe me, what you have
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learned so far matters and matters greatly. i also will not burden you with another litany of complaints and grievances or exhortations to solve the problems that none of us of more advanced years have been able to solve, or in some cases, even to understand. it seems to be standard fare these days to charge young people to go out and do great things. what is often meant is that they do something in the great out there as opposed to their personal lives. realistically, the great battles for most of us involved conquering ourselves and discharging our duties at hand. these personal victories are the real building blocks for doing
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great things. when i take stock of the more than six decades of my own life, the great people are mostly to people of my youth here in savannah. my grandparents, my mother, my relatives, my neighbors', my teachers. one of the great things they all have in common is the way they discharge their daily duties conscientiously and without complaint or grievance. i think of relatives like cousin hattie who cleaned rooms at a hotel, cousin of robert, her husband, who cut grass and farmed. and my mother and so many others here in savannah who labored as
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maids for small pay and long hours. they went about their lives doing their best with what they had, knowing that this was not necessarily fair. they played the hand they were adults. they were unfailingly good, decent, and the kind people whose unrequited love for our great country and hope for our future were shining examples for all of us to emulate in our own struggles. weather in the summer heat of liberty county or the sudden downpours at the bus stop, they taught us how to live with personal dignity, with honor, with self-respect, and respect for one another. to this day, the good people who
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do their jobs, raise their families, and a sacrifice so that we can gather here in peace are the heroes for i draw a great inspiration. those who fight our wars, keep the peace at home, put out our fires, teach our children, mend our wounds, and tended to our health, these are the real heroes. quite a lot has happened in my lifetime. monumental events involving constitutional law and civil rights have made it possible for me to stand here today as a member of the supreme court of the united states. they're also the technological advances from the scrubboard to
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the washing machine, the dishwasher, one of my favorites. the flat-screen tv, the computer, the ipod, and the now-on the present cell phone. my wife often comments on the range of my life. i have been blessed to know and be friend the best and -- the best educated and the least educated, the wealthiest and the poorest, the healthiest and the most physically challenged. i have seen a lot in my journey from my home here in the dark soil of south georgia to the white marble of the supreme court. it has been a longer journey that can be measured by the miles from here to washington d.c., much, much longer.
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i have learned many lessons along the way. there is a saying -- if you want to know what is down the road, ask the person who is coming back. today, i have come back. i have returned from down the long road and returned home where the journey began, returned to meet you at the commencement of your own journey through the rest of your lives. i would like to take a few more minutes of your time here by the road. i have a few modest suggestions. i promise i will not hold you wonder. first, show gratitude and appreciation. none of you made it here on your own. there are people in your lives
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who gave birth to you, raised you, and loved you, even when you were not so local. -- even when you were not so lovable. thank the people who paid your tuition and your expenses. [cheers] there are those who helped and counseled you through difficult times for when you had or made hard decisions who were compassionate enough to tell you what you needed to hear, not what you wanted to hear. take some time today to thank them. did not put it off. i never took the time to
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properly thank my grandparents, the two people who made it possible for me to be here today. deep down i know they understand, as they always did. as parents seem to always find the way to understand. it is still a burden i will carry to my grave. a simple thank you it will do wonders. you may never know how much the expression of gratitude will mean to a person who made sacrifices for you. almost 30 years ago i went to visit my eighth grade teacher for the first time since high school. i thanked her for all she had done for me and for being compassionate enough to tell me the truth about my deficiencies when i was in the eighth grade.
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i told her that i assumed that after more than 40 years of teaching, i was among a long list of former students who have come back to thank her. she said, no, you are the first. one additional word. on my business with her in new jersey, she showed a friend and me her tiny room. it had a small bed, a bureau, and a chair. while telling us about her room, she listed the items to be given away after her death. she is 96 years old now. a rosary to a niece, a prayer book to some sisters. there was a large photo of her
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and me on a bureau. she embraced it. she said, this goes in my coffin with me. take a few minutes today to thank anyone who helped you get here today. then tried to live your lives as though you really appreciate their help and the good it did in your lives. earn the right to have been helped by the way you live your lives. remember life is not easy for any of us. it will probably not be fair and it's certainly is not all about you. the gray hairs and wrinkles use seat on older people have been earned the hard way -- by dealing with the challenges of life.
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when i was a young man and labored under the delusion of my own omissions, i thought i knew more than i did. with the wisdom that only comes with the passage of years, the older folks warned me ominously, "son, you just live long enough and you will see." they were right. life is humbling and can be hard, very hard. it is a series of decisions, some harder than others come out some good, and too many of them bad. it will be up to each of you to make as many good decisions as possible and to limit the bad ones. then to learn from all of them.
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i will urge you to resist those around you who insist on making wrong decisions. being accepted or popular is an often bargain and as with all bargains, not worth it . it is never wrong to do the right thing. it may be hard but never wrong. each of you is about to begin a new journey and whatever it may be, do it well. if you are going to graduate school, the military, or work, do it to the best of your abilities. each year at court, i hire four new law clerks. they are the best of the best. the major difference between
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them and most of their classmates is self discipline. by self discipline, i mean doing what you're supposed to do and not doing what you're not supposed to do. there are many distractions, it is up to you to take care of your business. remember, the rewards of self- indulgence are not nearly as great as the rewards of self- discipline. even as you take care of your business, there are a few other necessities for your journey. at the top of the list are the faith, family, and friends. when all else fails, there will always be there, even if we do not deserve them.
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having needed them myself, i know they will always be your saving grace. trustworthiness and honesty are next. if you cannot be trusted, how can you be trusted with important ones? it may be hard to be honest, but it is never wrong. i can only work with honest people. i need to be able to trust them, and so will you. timeless is an invaluable character trait. i want my work done right and i want it on time. a matter what you do come do it right and do it on time. my brother used to say that he hurried out to be early so he could wait.
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not a bad idea. stay positive. there will be many around you who are know-it-alls, cynical, and negative. these cause cancers of the spirit and a add nothing worthwhile. do not inhale their secondhand cynicism and negativism. some, even those with the most opportunities in this, the best country, will complain ceaselessly. it may be fair to ask them a question as they complain about the lack of imperfection in you or others and about our imperfect institutions or our country. just ask them what they are perfect ad other than
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complaining. look, many have been angry at me because i refuse to be angry or full of grievances. some will be angry with you for not becoming agents in their most recent cynical causes. do not worry about it. no monuments are built to si cynics. people your comfortable introducing to your family, your minister. always have good manners. this is time honored, not old- fashioned. good manners will open doors that nothing else will. given the choice between two confident people, most of us will opt to hire the one with good manners. for example, no matter what the
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adults say about calling them by their first name, do not do it. believe me, they remember, and not as timely as you might think. i think got my grandparents made me put a handle on grown folks names and tell me to say please and thank you, yes, sir, and no, ma'am. [applause] finally, finally, the golden rule that is virtually universal. treat others the way you want to be treated. [applause]
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when others hurt you, you may be required to treat them far better than they treated you. [applause] and far better than human nature would suggest they deserve. help others as you needed to be helped. if you want to receive kindness, respect, and compassion, you must first give them. to do that, you must first have them yourself. three decades ago, a janitor in the senate with whom i often spoke pulled me aside. i probably looked like i had the weight of the world on my shoulders. i must have looked desponding, not an uncommon look for young men who is somewhat confused and
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who is faced with the comment difficulties of life and hoping to make some difference in the lives of others. "son youled me "meson, cannot give what you do not. have" he was right. he echoed what i have heard through my youth. my grandfather would sometimes point at the fields and make the point that we could not give to others if we had not worked all summer to plants, to tilt, and to harvest. as a child, that meant little. as a man, i know he was right. there are no guarantees in life.
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even with all the uncertainties and challenges, it is worth living the right way. as you commence the next chapter in your young lives, i urge you to do your best, to be your best. each of you is a precious, pressures building block for your families, york university, your communities, and our great country. it is up to each of you to decide exactly what kind of building block you will be. i wish each of you godspeed and i think you and congratulate you. [cheers] >> and asked not who was flown on three space station nation's addresses graduates and talks about her love of flying.
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from st. petersburg, florida, this is about 10 minutes." to our graduates. [applause] i would like to thank you for sharing this state with you. it is an honor to be here. -- i would like to thank you for sharing this day with you. i was at the junior college in the aviation administration program. i believe this program was the first real stepping stone for me to pursue my passion for flying and to continue with my studies and to be here standing before you as an astronaut. i will try to keep this brief. i would like to start a slide show, to play as i speak.
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i was blessed with the honor an opportunity to spend three months living and working on the international space station. aside from the launch and landing, these are all pictures i have the opportunity to take while i was in orbit. the picture will not do the real thing justice. arelieve our spacecraft's just too beautiful to capture with a camera. it is very surreal to me i had planet from a 200-mile vantage point. for some reason, i always thought once i saw earth from
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space, that we would seem insignificant in the grand scheme of things. instead, every time i looked out the window, i had a sense of everything having its place. on thisall wriding planet. each of us has a place and reason. sometimes the place and reason are not easy to figure out. i thought i would share some of the things that have stood out for me. my apology in advance. none of these are new. they seem to hold very true. first, pay attention to the things you enjoy and let them died you. i was so happy.
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you.d let them die do yguide i thought, maybe i can have a job that would be fun. each of us enjoy different things. it is all about having a real passion for something. it is great when you have a passion and it can be a part of your life. it can influence all your choices weather with your career or your family. for me, flying was a passion that influenced me the most. i was fortunate to have a father that love building and flying airplanes. we spent a lot of time hanging out at the local airport. my father shared his passion for flying with me. i believe it was the single
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biggest influence on the path i took. it is important to be true to yourself. next, there are some people that know you better than you know yourselves. through school and work, i found there are people that seem and appreciate things in me that i would not do myself. these are the people were my mentors. the biggest example was deciding to apply for the ash not office. if it were not for the encouragement i received from these people, i would not have applied. it takes a lot to trust in yourselves and know what you're capable of. trust the people who know you best. be happy, be positive, and have
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a good attitude. there is no situation where this will not serve you well. i can tell you that i feel fortunate to have spent three months living on a space station with a happy crew of six. we worked hard and we had a good time. the only easy day was yesterday. i did not mean it as strong as it sounds. every day will present you with challenges. someone once said we should look at these challenges as opportunities to learn more about ourselves and about the world around us. i think that person was right. take the high road, do your best, and don't forget the
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golden rule -- to do unto others as they would do unto you. they will serve you well. be true to your word. the things you say and do can have an important impact on others. stop and smell the flowers. whatever path you are taking, you should feel confident you have prepared well. enjoyed the little surprises that will meet you along the way. they seem to turn life experiences into an adventure. i had very expectations of what the whole space experience would be like. every expectation was exceeded, not because what i expected to find there but because of the little surprises that i did not expect. there were things like the smell
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of things went a new space craft arrived and you approached the hatch. things like how quickly our bodies adapt to a new environment, how floating and pushing with your fingertips gently off a wall becomes normal and you don't think about walking anymore. i was surprised of the overwhelming beauty of our planet. every day up there i was blessed with the opportunity to spend time and seeing things i never would have expected. moving around the planet every 90 minutes with the corporate slightly changing, with the sun rising and setting gracefully every 45 minutes, the moon coming into view, i could not
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help but look at birth and seen anything other than the living, beautiful thing. sometimes very peaceful and other times dynamic and aggressive. i am thankful for the special surprises i have encountered along the way. i am thankful the design of the space station included windows. i hope you have enjoyed the pictures of space in the background. i hope they help you discover something new about the journey you have ahead of you. there is always some new surprise every time i looked out them. i wish the best for all of you and that your dreams come true. thank you. [applause] [applause]

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